SEBI cracks down on gaming apps using real-time stock data

The Securities and Exchange Board of India (SEBI) is taking action against gaming apps that offer virtual trading services and fantasy games based on real-time share prices of listed companies. 

These apps have proliferated recently, fueled by high retail investor interest in stock trading.

SEBI has directed stock exchanges and depositories to stop sharing real-time price data with third parties to curb such activities. 

A regulatory official clarified that using data for educational or entertainment purposes is acceptable, but monetary incentives based on virtual stock portfolio performance are prohibited. "Then it’s like dabba trading, which is illegal," the official stated.

Media agencies providing real-time data feeds will not be affected by this SEBI action.

In recent years, several stock gaming platforms have emerged in India. These platforms do not involve real-time trading through stock brokers but allow users to compete based on fictional trading strategies and portfolios. Users pay a membership fee to participate, and top performers receive prizes.

“This is a precautionary measure as it’s a niche segment,” said a member of SEBI’s expert committee on the secondary market.

In some developed countries, gaming based on real-time feeds is permitted as exchanges earn significant revenue from data dissemination. However, SEBI rules prohibit offering any game or league related to securities markets.

“If you are doing a wager contract it is not allowed. This is all unauthorized usage of data. We are now putting the responsibility on those who have data,” the regulatory official emphasized. 

“Exchanges and depositories will have to monitor how the data is being utilized.”