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    SEBI issues guidelines to prevent sharing of real-time stock exchange data with online gaming platforms

    The Securities and Exchange Board of India (SEBI) issued a circular on May 24, to curb the sharing of ‘real-time share prices’ or ‘price data’ with online gaming platforms that engage in virtual trading services or fantasy games. Multiple online gaming platforms, apps, websites, etc allow users to engage in these fantasy games based on this highly sensitive information, with some even offering monetary incentives based on the performance of the virtual stock portfolio. Thus, the Secondary Market Advisory Committee (SMAC) of  SEBI has issued recommendations to curb the misuse or unauthorized use of such data.

    Under the new guidelines, registered market intermediaries and ‘Market Infrastructure  Institutions’ (MIIs), which include stock exchanges, clearing corporations and depositories, etc., are required to ensure that no real-time price data is shared with any third party unless the “sharing of such information is required for the orderly functioning of the securities market  or for fulfilling regulatory requirements.” They stated that market price data can be shared with a lag of 1 day, without any incentive, only for the purpose of investor education and awareness.

    Afaqs confirmed that these restrictions do not apply to media agencies that report on real-time data feeds. A SEBI official told afaqs, “If you are doing a wager contract it is not allowed. This is all unauthorized usage of data. We are now putting the responsibility on those who have data.”

    In order to ensure compliance, SMAC has mandated MIIs or market intermediaries to enter into “appropriate agreement” with any entity they intend to share real time price data with. This agreement is required to justify that sharing this data is necessary for the orderly functioning of the securities market. The Board of the MIIs or market intermediaries must review the activities of these entities at least once in a financial year. Further, MIIs are also required to make provisions to prevent any misuse of the data and make necessary  amendments to  the  relevant bylaws or  rules and  regulations to reflect the new guidelines.

    The National Stock Exchange of India had also warned against using real-time market data for online gaming, in April 2023, stating that this sharing of information went against “principles of fair and transparent trading.” In a circular issued to all trading members it said that, “NSE data is only for legitimate trading purposes by their clients and not for the purpose of gaming and virtual trading.”

    Exchanges and regulators have long been skeptical of online trading games. In 2016, The Securities and Exchange Board of India (SEBI) had warned investors to be wary of online stock games on the Bombay Stock Exchange and National Stock Exchange that allowed people to bet on stocks, currencies and commodities. Bombay Stock Exchange (BSE) warned “Participation in such schemes is at investors’ own risks, cost and consequences. Such schemes are neither approved nor endorsed by Exchange.”

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    The post SEBI issues guidelines to prevent sharing of real-time stock exchange data with online gaming platforms appeared first on MEDIANAMA.

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