With an aim to curb misuse of real-time, securities-price data by various entities including online gaming apps and virtual-trading services, the market regulator has issued norms for the sharing of this price data.
With rising retail interest in stock trading and benchmark indices hitting record highs in recent years, third-party apps apps providing virtual trading services or fantasy games based on real-time share price data have spawned.
In a circular issued on May 24, the Securities and Exchange Board of India (Sebi) has said that stock exchanges, clearing corporations and depositories (or market infrastructure institutions or MIIs) and registered intermediaries (such as stock brokers) must ensure that no real time price data is shared with any third party except where sharing of such information is required for orderly functioning of the securities market or for fulfilling regulatory requirements.
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The provisions will come into effect on the 30th day from the issuance of the circular (June 22 from counting to the 30th day).
When MIIs or market intermediaries are sharing such data with third-parties, they need to have in place an agreement which will give details of the activities, for which this data will be used by the third party and also the reasoning why the data should be used by the third party for the orderly functioning of the securities market.
The price data can be shared for investor awareness and education programmes but without offering any monetary incentive to the participants and with a one-day lag.
MIIs and market intermediaries have to ensure due diligence while sharing such data, said the circular. The legal agreement for sharing the data shall have provisions to prevent any kind of misuse of the same by the entities.
The regulator has also asked the MIIs and the market intermediaries to take necessary steps, on a best effort basis, to avoid misuse of price data by entities with whom the data is being shared.
MIIs have been tasked with ensuring systems are put in place to make implement these norms, to bring these norms to the notice of market participants and to make necessary amendments to bye-laws, rules and regulations, for their implementation.
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