SEBI asks exchanges and depositories, not to share real time data with third parties

The Securities and Exchange Board of India (SEBI) has introduced new regulations on Friday to govern the sharing of real-time share price data with third parties, including various online platforms. SEBI has issued guidelines to curb the misuse of such data, particularly by online gaming platforms, apps, and websites that offer virtual trading services or fantasy games based on the movement of real-time share prices of listed companies.

"It has been observed that certain online gaming platforms, apps, websites, etc. (hereafter referred to as "platforms") are providing virtual trading services or fantasy games which are based on the movement of real-time share prices (price data) of listed companies. Some platforms are even offering monetary incentives based on the performance of the virtual stock portfolio" said SEBI.

To address these issues SEBI has issued various guidelines to the Market Infrastructure Institutions (MIIs)--including stock exchanges, clearing corporations, and depositories--and registered market intermediaries.

SEBI said that MIIs and market intermediaries must ensure that real-time price data is not shared with any third party unless necessary for the proper functioning of the securities market or regulatory compliance.

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It added that entities intending to share real-time price data must enter into formal agreements that clearly outline the activities for which the data will be used, ensuring it supports the orderly functioning of the securities market. The list of entities and activities must be reviewed annually by the board of the MIIs or intermediaries.

The new guidelines will come into effect 30 days after the issuance of the circular, said SEBI.

According to SEBI the market price data can be shared for investor education and awareness without any monetary incentives, but this data must be delayed by one day.

SEBI also directed the MIIs and intermediaries to conduct due diligence when sharing data and include provisions in agreements to prevent misuse. They must also take all possible steps to prevent misuse of price data by the entities.