This ₹70,000 Crore Illegal Stock Market is Bigger than NSE
There is the dark side to everything and the stock market is not an exception. It has a dark side too. That is called Dabba trading. Which is carried out illegally. Totally outside of the purview of regulatory bodies like SEBI, the Government and exchanges.
Dabba trading is a menace but still, its charm attracts people. Why? The main reason for this is that it allows traders to avoid the Securities Transaction Tax (STT), GST, Income tax and significant exchange-related expenses imposed on regulated trading activity.
None applies to Dabba trading. Also, Dabba operators offer leverage ranging from 50 to 500 times, making it an attractive option for many.
However, the most significant issue with Dabba trading is its illegality, leading to all transactions being conducted in cash. If you find yourself in trouble with Dabba trading, it is highly unlikely that you can seek assistance from the Securities and Exchange Board of India (SEBI) or local police.
These days dabba operators have become tech-savvy too. They have apps and software which provide a live data feed. But here a question arises. How do they get the necessary software and live trading data which is solely available for registered stock market brokers? Do they have access to data from the National Stock Exchange (NSE)?
Dabba trading causes harm to the entire ecosystem and to retail traders involved in Dabba trading too. The pertinent question is What actions are SEBI and NSE taking to address this issue?
Dabba trading, also known as bucket trading, has an average daily turnover of ₹70,000 crore. In the fiscal year 2022-23, NSE's capital market had a turnover of ₹53,000 crore. This means that the turnover of dabba trading exceeds that of NSE.
When we examine the turnover of the past 20 years, it's evident that NSE and dabba trading had similar turnovers, but since 2017, NSE's turnover increased compared to dabba trading. In 2013, NSE's turnover was double that of dabba trading, but today, dabba trading's turnover surpasses NSE's.
Dabba trading, in essence, has spread throughout India, with its origins in Gujarat, Maharashtra, and Madhya Pradesh. But how exactly does dabba trading work?
This video aims to explain what Dabba trading is, how widespread it is, where it operates, and how it functions. Just like there are legitimate brokers, there are Dabba operators, and this video will explore how these Dabba operators work.
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00:00 Intro
01:26 How Big is Dabba Trading
02:30 How Dabba Trading is Carried Out
03:27 A Trader is Helpless in Case of Loss
04:12 Dabba Trading is A Game of Demand and Supply
05:33 Our Sting on Dabba Operators
07:10 Is there Anyone to Regulate Dabba Trading
08:12 Dabba Traders Under Police Scanner
09:21 Dabba Trading Impact on Government Exchequer