SEBI has observed the emergence of online gaming platforms, applications, websites, and similar entities providing virtual trading services or fantasy games based on real-time share prices of listed companies. Some platforms even offer monetary incentives to users based on the performance of their virtual stock portfolios. However, this developing trend raises concerns regarding the potential misuse or unauthorized exploitation of real-time price data, prompting regulatory scrutiny and intervention.
In response, SEBI issued Circular No. SEBI/HO/MRD/MRD-PoD-3/P/CIR/2024/56, dated May 24, 2024, outlining regulations for sharing real-time price data with third parties.
1. Sharing of real-time price data permitted only for regulatory needs: MIIs and market intermediaries must ensure that real-time price data is shared with third parties, including various platforms, only when necessary for the orderly functioning of the securities market or to comply with regulatory requirements.
2. MIIs and market intermediaries required to sign agreements for real-time data sharing: MIIs and market intermediaries must enter into appropriate agreements with entities intending to receive real-time price data. These agreements should outline the activities for which the real-time price data will be used and justify its necessity for the orderly functioning of the securities market. The boards of MIIs or market intermediaries must review the list of entities and activities for which real-time data is shared at least once per financial year.
3. Due diligence to prevent misuse while using share market data for educational purposes: Market price data may be shared for investor education and awareness activities without offering any monetary incentives to participants, with a one-day lag. MIIs and market intermediaries must exercise due diligence while sharing such data, incorporating legal provisions in agreements to prevent misuse by entities. Additionally, they must take all necessary measures to prevent misuse of the price data by entities with whom it is shared.
There is a growing concern globally about sharing real-time price data with third parties, particularly when it extends beyond market rules and regulatory needs. Regulators worldwide are recognizing the risks associated with such actions, including market manipulation and leakage of sensitive information. As countries adapt to changing digital environments and the proliferation of online platforms offering financial services, it is crucial to prioritize responsible data sharing to foster trust and stability in global financial markets.
In conclusion, SEBI's issuance of regulations for sharing real-time price data underscores its commitment to maintaining market integrity and protecting investors. By limiting data sharing to essential instances and emphasizing due diligence, SEBI aims to mitigate the risks associated with unauthorized use of price data. Furthermore, the global concern surrounding this issue highlights the need for collective efforts to ensure responsible data-sharing practices, thereby promoting trust and stability in financial markets worldwide.
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