Exchanges and depositories are urged by SEBI not to provide real-time data to outside parties.

In order to prevent such data from being misused, SEBI has released rules. This is especially relevant for websites, apps, and online gaming platforms that provide fantasy games or virtual trading services based on the movement of listed firms’ real-time share prices.

On Friday, the Securities and Exchange Board of India (SEBI) unveiled new rules governing the dissemination of real-time share price information to outside parties, including different internet platforms. In order to prevent such data from being misused, SEBI has released rules. This is especially relevant for websites, apps, and online gaming platforms that provide fantasy games or virtual trading services based on the movement of listed firms’ real-time share prices.

It has been noted that a number of websites, apps, and other online gaming platforms (henceforth referred to as “platforms”) offer fantasy games or virtual trading services that are based on the movement of listed companies’ real-time share prices, or pricing data. According to SEBI, some platforms even provide financial incentives that are dependent on how well the virtual stock portfolio performs.

The Market Infrastructure Institutions (MIIs), which include stock exchanges, clearing companies, depositories, and regulated market intermediaries, have received a number of directives from SEBI in order to address these concerns.

According to SEBI, MIIs and market intermediaries are required to make sure that real-time price data is not disclosed to any outside parties unless it is required for regulatory compliance or the securities market to operate properly.

It further stated that in order to ensure the proper operation of the securities market, organizations planning to share real-time pricing data must sign written agreements that specify the purposes for which the data will be utilized. The board of the MIIs or intermediaries is required to examine the list of entities and activities once a year.

According to SEBI, the revised norms would take effect thirty days after the circular is released.

SEBI states that there is no need for financial incentives when sharing market price data for the purpose of educating and raising investor awareness, however the data must be one day behind schedule.

In addition, SEBI instructed the MIIs and intermediaries to incorporate clauses to prevent misuse in agreements and to exercise due diligence when exchanging data. They have to also take all necessary precautions to stop the entities from misusing price data.

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