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. Such apps have increased in number recently, fueled by high retail investor interest in stock trading.
If a third-party platform acquires this real-time data and uses it to run games in exchange for a subscription fee, it will interfere with these exchanges’ revenue stream and violate SEBI’s rules and regulations.
Hence, SEBI has directed stock exchanges and depositories to stop sharing real-time price data with third parties to curb these 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.
SEBI has also explicitly prohibited creating and running any games or competitions on securities and security markets.
“If you are doing a wager contract it is not allowed. This is all unauthorised usage of data. We are now putting the responsibility on those who have data,” the regulatory official emphasised. “Exchanges and depositories will have to monitor how the data is being utilised.”
One of the alternatives to fantasy trading is Regulatory Sandbox introduced by SEBI in 2020 where it allows the use of a live environment where financial tech companies can experiment with their ideas on a fixed number of customers, within a limited time frame.