SEBI Introduces Guidelines to Regulate Real-Time Share Price

The Securities and Exchange Board of India (SEBI) has introduced new regulations to control the sharing of real-time share price data with third parties, aiming to prevent potential misuse. These guidelines specifically target online platforms that use this data for activities like fantasy games and virtual trading.

Fantasy Games and Virtual Trading: SEBI is particularly concerned about the misuse of real-time stock prices by online platforms offering fantasy games and virtual trading. In these games, users create virtual portfolios based on actual stock prices, sometimes involving entry fees and cash prizes. Virtual trading platforms simulate stock trading without real money, often incentivizing users with monetary rewards based on virtual performance.

Potential Data Misuse: SEBI noticed that certain online platforms were offering virtual trading services or fantasy games based on real-time share prices, raising concerns about data misuse. Some platforms even provide cash prizes based on the performance of virtual portfolios.

Uninformed Investors: Another issue is that these games and platforms might attract participants who are unaware of the risks associated with real stock market investing.

Restricted Data Sharing: Under SEBI’s guidelines, Market Infrastructure Institutions (MIIs), including stock exchanges and registered market intermediaries, must ensure that real-time price data is shared with third parties only when necessary for the proper functioning of the securities market or for regulatory compliance. Agreements between MIIs and third parties must clearly specify the intended use of the data to support orderly market functioning.

Annual Reviews: MIIs or intermediaries’ boards must review the activities and entities receiving real-time data at least once a year.

Data Delays for Education: For investor education purposes, real-time data sharing is permitted, but the data must be delayed by at least one day to prevent influencing real-time trading decisions.

Due Diligence: MIIs and intermediaries must conduct thorough due diligence when sharing data and include provisions in their agreements to prevent misuse. They must also take all possible steps to ensure that the entities they share data with do not misuse it.

These new rules will take effect 30 days from the issuance of the SEBI circular, aiming to enhance data security and protect investors from potential risks associated with the misuse of real-time share price data.