Exclusive: ED raids unearth piles of cash in major crackdown against dabba trading; searches in Mumbai, Delhi, 2 other cities

In a major crackdown against 'dabba' traders, the Enforcement Directorate (ED) launched raids at several locations across different parts of the country in connection with illegal market activities through mobile apps such as Lotus Book and I Bull. During the searches in Mumbai, Delhi, Indore, and Ahmedabad, investigators found piles of illegally earned cash through dabba trading-related activities, Zee Business learned from sources.

Cracking the whip against miscreants, the country's financial crime-fighting agency covered a range of premises at these locations, according to the sources.

What is dabba trading? Is it different from grey market trading?

Although dabba trading and grey market trading are both illegal methods of trading that bypass the regulatory framework, they differ slightly in nature. Also known as bucket trading or box trading, dabba trading involves dealing in securities outside of main stock exchanges such as BSE and NSE.

In dabba trading, traders place positions in stocks or other financial instruments without actually transacting in the securities on SEBI-registered and regulated platforms.

Entities facilitating these off-market deals are known as dabba operators or dabba trade operators.

Transactions in this illegal form of trading are settled in cash, with no formal or regulated record-keeping mechanism. In other words, traders take positions in securities without the trades being executed on official SEBI-recognised bourses.

In case of losses or fraud, no grievance redressal mechanism is available to investors, as these trades are not executed through official stock exchange platforms.

Just like grey market trading, dabba trading is illegal in India.

In the grey market, shares of real-life businesses are traded outside the recognised listed space.

The grey market is also referred to as the 'parallel market' because it enables participants to deal in securities 'parallelly', outside the listed ecosystem.

SEBI and stock exchanges vs dabba trading

Capital market regulator SEBI has repeatedly run awareness campaigns to educate market participants about illegal and risky activities such as dabba trading, with the aim of protecting investors from potential losses.

SEBI recognises dabba trading as an illegal and unregulated form of trading.

Investors should exercise caution and refrain from indulging in any form of dabba trading, according to SEBI.