[Analysis] SEBI Guidelines on Real-Time Price Data Sharing – Ensuring Market Integrity

Real-time price data sharing refers to the regulated process of disseminating live share price information from stock exchanges, clearing corporations, and depositories (collectively known as Market Infrastructure Institutions or MIIs) to third parties. This sharing is strictly controlled to ensure it is only done for regulatory needs or the orderly functioning of the securities market. SEBI mandates that MIIs and market intermediaries sign agreements with entities they share data with, specifying the data's use and conducting annual reviews to prevent misuse. Data for educational purposes must be shared with a one-day lag and without monetary incentives.

Table of Contents

1. Background
2. SEBI Guidelines for Sharing Real-Time Price Data
3. Global Regulators Prioritizing Responsible Data Sharing
4. Conclusion

1. Background

The Securities Exchange Board of India (SEBI) has identified that certain online gaming platforms, apps, and websites offer virtual trading services or fantasy games based on the real-time share prices of listed companies. Some platforms even provide monetary incentives linked to the performance of virtual stock portfolios. This emerging practice raises significant concerns about the potential misuse or unauthorized exploitation of real-time price data, prompting regulatory scrutiny and intervention.
To address these concerns, SEBI issued Circular No. SEBI/HO/MRD/MRD-PoD-3/P/CIR/2024/56 on May 24, 2024, establishing norms for sharing real-time price data with third parties. These norms apply to stock exchanges, clearing corporations, depositories (collectively referred to as Market Infrastructure Institutions or MIIs), and registered market intermediaries.

2. SEBI Guidelines for Sharing Real-Time Price Data

2.1 Real-Time Price Data Sharing Permitted Only for Regulatory Needs

Stock exchanges, clearing corporations, depositories, and registered market intermediaries must ensure that real-time price data is shared with third parties only when necessary for the orderly functioning of the securities market or to meet regulatory requirements.

2.2 MIIs and Market Intermediaries to Sign Agreements for Real-Time Data Sharing

MIIs and market intermediaries must enter into agreements with entities with whom they intend to share real-time price data. These agreements should specify the activities for which the data will be used and justify that it is required for the orderly functioning of the securities market. The Board of the MIIs or market intermediaries must review the entities and activities for which real-time data is shared at least once per financial year.

2.3 Due Diligence to Prevent Misuse While Using Share Market Data for Education

Real-time market price data may be shared for investor education and awareness activities, but only with a lag of one day and without offering monetary incentives to participants. To prevent misuse, MIIs and market intermediaries must exercise due diligence when sharing such data, incorporating legal provisions in agreements. They must also take every measure to prevent the misuse of price data by the entities with whom it is shared.

3. Global Regulators Prioritizing Responsible Data Sharing

Globally, there is increasing concern about sharing real-time price data with third parties, especially beyond market rules and regulatory needs. Regulators worldwide recognize the dangers of such practices, including market manipulation and the leakage of sensitive information. As countries adapt to changing digital environments and the rise of online platforms offering financial services, prioritizing responsible data sharing becomes crucial. This fosters trust and stability in global financial markets.

4. Conclusion

SEBI’s issuance of norms for sharing real-time price data underscores its commitment to maintaining market integrity and investor protection. By restricting data sharing to essential instances and emphasizing due diligence, SEBI aims to mitigate the risks associated with unauthorized use of price data. The global concern over this issue highlights the need for collective efforts to ensure responsible data-sharing practices, thereby fostering trust and stability in financial markets worldwide.