Yes it’s legal there is no law to prohibit it
Is Binary trading on the outcome of events legal in India ? Doesn't involve trading of forex.
A contract like, Will sale of electric cars be more than 5% of net car sales in india by 2030, is created. Possible predictions are Yes / No. As the probablity of the event changes so does the price via trades. When the date arrives, the contract matures to specific amount if you predicted correctly. It doesn't involve any forex exchanges. A small fee would be charged by platform to enable trades. The platform acts only to match the trades.
Asked 1 year ago in Business Law
Ask a question and receive multiple answers in one hour.
Lawyers are available now to answer your questions.
10 Answers
Binary options are prohibited in India because they involve significant risk and are purely speculative
There are no SEBI-registered brokers in India. Therefore, binary options brokers are required to obtain Cyprus Securities and Exchange Commission (CySEC) licensing. Most European brokers who offer this trade are licensed under this.
Final Words
Binary options are prohibited in India because they involve significant risk and are purely speculative. If you become a victim of a scam while trading in them, you will have no recourse from a court or the SEBI.
Dear Client,
Trading binary options is prohibited in India due to their high-risk nature and speculative characteristics. If you fall victim to a scam while engaging in binary options trading, legal or regulatory bodies like the court or SEBI won't be able to provide you with any recourse.
Not legal in India.
- As per Supreme Court , A ‘game of skill or speculation ’ means , the game in which , the success primarily depends on the superior knowledge, training, attention, experience, and adroitness of the player..
- Further , the Supreme Court has held that unless it is purely a game of chance, it is not illegal.
- And further , as per Supreme Court, even though the most important aspect of speculation is chance it does not mean that it is completely devoid of skill.
- Hence, the games of speculation which require skill up to a certain degree, are not illegal, but other side , as per the guidelines of the Reserve Bank of India, binary trading or any form of online trading of foreign exchange is not legal in India.
- Further, According to the Foreign Exchange and Management Act , the trade of forex or binary options is prohibited in India.
Lets assume the event to be traded is defined as such: If an eligible peer-reviewed journal publishes research that reports that a material is room-temperature superconductive (it has a critical temperature greater than room temperature, exhibits 10^-10 ohm-cm electrical resistivity or less, and exhibits the Meissner effect), then the market resolves to Yes. Outcome verified from Condensed Matter Physics research by 31st December 2023. The event is although binary but needs deep researach about the field. Also, as time passes, the trader can change his/ her position based upon more factual news. Also as the trader can trade the contract for a fractional profit / loss before the contract expiry date, hence the risk is significantly reduced. The traders are not playing against the platform, ie the platform doesn't earn by making trader's loss. For each Yes contract, there is complementary No contract, The net amount invested is redistributed among traders where the platform just helps traders match their orders charging a small fee per trade. In that way, User's interest are protected. Also, as a trader can have any number of Yes and No contracts simultaneously, he can adjust his risk and reward ratio, ex: a trader can have 100 contracts for Yes and 75 contracts for No, bought at different prices. The Prices of contract would just be a probabliity of such event happening. More info on https://kalshi.com/
Asked 1 year ago
basically options are speculative and involve significant risks and would be prohibited in India
Binary option trading is considered to be illegal in India but still, traders across the country carry out such trading and the income from the same is liable to be taxed. Such income is considered to be speculative income and is taxed at 30%.
Since binary opinion trading is not legal in India, there is some level of ambiguity in its taxation as well. Like income from futures and opinions trading, many experts believe income from binary trading can also be treated as business income. However, the widely popular opinion is that it will be treated as speculative income. Therefore, it is better to consult a tax expert in this regard to arrive at a definite solution.
Dear Client,
Regulatory Considerations: Prediction markets and trading platforms often fall under financial and securities regulations, depending on the jurisdiction. The nature of the contracts and the activities described might raise legal and regulatory questions.
Ethical Considerations: Offering contracts based on scientific discoveries raises ethical questions about the nature of the predictions and their potential impact on scientific research. The potential for market speculation influencing scientific research outcomes could be a concern.
Regards
Prime Legal
You can do it legally