Sebi cracks down on fantasy game companies and virtual trading platforms, restricts real-time data sharing

The move comes amidst the rising trend of betting, leagues, and transactions on online gaming platforms using real-time data on stock price movements.
SEBI (File Photo | Reuters)
SEBI (File Photo | Reuters)

MUMBAI: After clamping down on unregistered financial influencers who were talking up stocks and pedaling unverified information, the market regulator Securities and Exchange Board (Sebi) is reigning in fantasy game companies and virtual trading platforms by restricting them from sharing real-time market data and stock prices to third-party entities.

In a circular, the regulator has directed stock exchanges, clearing corporations, depositories, and stockbrokers to not share real-time price data with third parties. It has also directed market intermediaries to formalise agreements around data sharing and specify the reasons for seeking real-time data.

“Market intermediaries shall enter into appropriate agreements with entities with whom they intend to share real-time stock price data. Such agreement shall provide for activities for which the real-time price data would be used by the entity including the justification that it is required for the orderly functioning of the securities market,” the Sebi circular said.

The restriction will be applicable after a month, the regulator said.

The move comes amidst the rising trend of betting, leagues, and transactions on online gaming platforms using real-time data on stock price movements. These games offer winning prizes after paying an entry fee and users compete on who makes the best-performing portfolio linked to the real stock performance.

At least once in a financial year the list of activities and entities using this data will have to be reviewed by the board of market intermediaries, the circular further said.

“Some platforms are even offering monetary incentives based on the performance of the virtual stock portfolio,” Sebi said.

Stock exchanges offer real-time data as a paid service to stockbrokers and subscribers for various market segments. For using market data for educational programmes, the Sebi has directed sharing it with a day’s lag.

“Market price data may be shared for investor education and offering awareness activities without offering any kind of monetary incentive to the participants, with a lag of one day,” said Sebi.

Last year, when the markets were on a roll, many uneducated and unregistered self-proclaimed financial experts were using social media talking up stocks of their choice.

The biggest punitive action was in April last year when Sebi ordered finfluencer Ravindra Bharti and his wife to pay over Rs 12 crore for unlawful gains after false claims of 1000 percent returns.

After an investigation, Sebi said the parties would have to 'cease and desist from offering investment advisory services and acting as or holding themselves out to be investment advisors'.

"Guaranteed returns up to 1000 percent is a clear case of abuse of investors' confidence in the securities market," the order stated, adding that investors were lured to take advisory services by the “false promise" of 25 to 1000 percent returns.

Order was against Bharti and his wife Shubhangi and their company Ravindra Bharti Education Institute. He used to operate two Youtube channels and had over 11 lakh subscribers.

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