Sebi reins in virtual trading on fantasy game platforms

It has directed market intermediaries to formalise agreements around data sharing and specify the reasons for seeking real-time data.
The SEBI Bhavan at BKC Bandra in Mumbai.
The SEBI Bhavan at BKC Bandra in Mumbai. FILE Photo | EPS

MUMBAI: After clamping down on unregistered financial influencers who were peddling unverified information on stocks, the Securities and Exchange Board (Sebi) is reining 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 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 justification that it is required for orderly functioning of securities market,” the Sebi circular said. The restriction will be applicable after a month, it said.

The move comes amid 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 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, it said.

“Some platforms are offering monetary incentives based on the performance of the virtual stock portfolio,” Sebi said. Exchanges offer real-time data as a paid service to stockbrokers and subscribers for various market segments. For using market data for educational programmes, 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 wife to pay Rs 12 crore for unlawful gains after false claims of 1,000% returns.

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