Sebi red card for online games on realtime stock feeds

Sebi has turned its glare on virtual trading services that operate as gaming platforms on the basis of real-time stock prices. The booming markets and the surge in investor response at the common man’s level have attracted these companies to launch online stock gaming platforms.

The Economic Times has said the market regulator wants to stymie the source of information of these companies and has urged exchanges and depositories to refrain from sharing real-time data on prices with third parties.

These games involve real-time share prices of listed companies and players compete based on fictional trading strategies & portfolios.

“If the data is used for education or fun purposes it’s fine, but monetary incentives can’t be allowed based on the performance of the virtual stock portfolio,” a regulatory official told the newspaper. He also compared it with “dabba trading”, which is illegal.

Another official described it as a ” precautionary measure as it’s a niche segment.”

These gaming platforms are paid fees by the members of these platforms so that they can trade. The players are incentivised with cash prizes. A few stock gaming online platforms have flourished recently in India. They do not offer involve real-time trading through stockbrokers but users play – compete with each other – on fictional trading strategies and portfolios.

However, this decision of Sebi to cut off real-time data feed of share prices won’t impact media channels offering stock prices.

The regulator’s rules enjoin that no person should offer any game or league on securities or related to the securities market. However, in some developed countries stock exchanges earn revenue by furnishing real-time data to such platforms that offer gaming experiences.

“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. Exchanges and depositories will have to monitor how the data is being utilised,” remarked the official of the regulator.

Following the Sebi stance, Zerodha co-founder Nithin Kamath wrote on X, “Sebi’s circular essentially means that it ends all platforms offering trading competition, demo trading, CFDs (contracts for difference), and more.”

Earlier, exchanges reportedly cautioned entities using data scraped from their websites or those of brokers. However, Sebi’s hackles were raised when some gaming platforms were found flouting rules.

Sebi first got a whiff of the violation when, a few years ago, they found a company of businessman Raj Kundra obtained data feeds and was engaged in gaming activity on it.