Nikhil Menon Calls for Regulatory Clarity in India's Emerging Opinion Trading Markets

Legal expert Nikhil Menon advocates for a regulatory framework for opinion trading and prediction markets in India. Highlighting their potential as a financial innovation, he argues these markets differ from games of skill, needing distinct oversight from SEBI or MeitY to foster economic growth and inclusivity.

In a special interview with ANI, legal expert Nikhil Menon emphasized the pressing necessity for regulatory clarity surrounding opinion trading and prediction markets in India. Labeling them a formidable yet under-recognized financial innovation, Menon lamented the lack of precise definitions within the country's legal framework. He highlighted that such markets are often misconstrued as mere 'games of skill,' especially when contrasted with their operational norms in places like the United States, where they're regulated by the Commodities Futures Trading Commission (CFTC), analogous to India's SEBI.

Menon further elaborated on the uncertainty caused by the absence of specific regulations, pointing out that many companies in this realm face legal and tax-related issues. "Without regulatory clarity, there exists a continuous mismatch," Menon asserted. He advocated for a separate regulatory body, either SEBI or MeitY, to oversee this burgeoning sector, distinguishing it from traditional gaming and gambling laws. He noted that apart from the U.S., several countries have adopted a more liberal stance towards prediction markets.

Contrasting opinion trading with traditional stock trading, Menon remarked on its inclusivity, stating, "While stock trading demands specialized knowledge, opinion markets allow individuals to leverage their understanding of everyday topics, like national GDP growth, to build wealth." A structured regulatory framework could democratize wealth creation, he suggested, citing platforms like Probo that process significant financial transactions. Menon portrayed opinion markets as 'all-weather trading mechanisms,' resilient to economic changes, and predicted them to become potent wealth-building platforms, enhancing India's digital economy if proper regulations are implemented.

(With inputs from agencies.)