SEBI Releases Norms For Sharing Real-Time Stock Price Data With Third Parties, Targets Fantasy Games And Virtual Trading Platforms

The Securities and Exchange Board of India (SEBI) has issued new regulations to control the sharing of real-time stock price data with third-party entities. The new guidelines are set to take effect from June 22, 2024.

The SEBI observed that recent trends have shown an increase in the use of real-time stock price data by various online platforms. These platforms often create fantasy games and virtual trading competitions based on the live movements of stock prices. Participants in these games sometimes pay an entry fee and compete for cash prizes, which are awarded based on the performance of their virtual stock portfolios. This has raised concerns about the potential for misuse and unauthorized use of real-time market data.

Key Provisions of the Circular:

1. Stock exchanges, clearing corporations, depositories (collectively referred to as Market Infrastructure Institutions or MIIs), and registered market intermediaries, such as stockbrokers, are prohibited from sharing real-time stock price data with third parties. Exceptions are made only when such sharing is necessary for the orderly functioning of the securities market or to meet regulatory requirements.
2. When MIIs or market intermediaries do share real-time data with third parties, they must enter into formal agreements. These agreements must detail the specific activities for which the data will be used and provide a justification for why this data sharing is necessary for the orderly functioning of the securities market.
3. The list of entities and the activities for which they use the real-time data must be reviewed by the board of the respective MII or market intermediary at least once per financial year.
4. Real-time market price data can be shared for educational and awareness purposes, but with a one-day delay and without any monetary incentives for participants.
5. MIIs and market intermediaries are required to exercise due diligence to prevent the misuse of real-time data.
6. MIIs must take necessary steps to implement these norms, including amending their bye-laws, rules, and regulations where needed. They must also inform market participants, including investors, of these changes and make the information available on their websites.

Click Here To Read/Download Circular