SEBI’𝐬 𝐁𝐞𝐞𝐟 𝐖𝐢𝐭𝐡 𝐕𝐢𝐫𝐭𝐮𝐚𝐥 𝐓𝐫𝐚𝐝𝐢𝐧𝐠 𝐀𝐩𝐩𝐬

𝐕𝐢𝐫𝐭𝐮𝐚𝐥 𝐬𝐭𝐨𝐜𝐤 𝐭𝐫𝐚𝐝𝐢𝐧𝐠 𝐩𝐥𝐚𝐭𝐟𝐨𝐫𝐦𝐬 are booming, offering users a chance to compete in fantasy stock games with 𝐟𝐢𝐜𝐭𝐢𝐨𝐧𝐚𝐥 𝐩𝐨𝐫𝐭𝐟𝐨𝐥𝐢𝐨𝐬. However, their reliance on 𝐥𝐢𝐯𝐞 𝐦𝐚𝐫𝐤𝐞𝐭 𝐝𝐚𝐭𝐚 has drawn scrutiny from SEBI, which recently restricted data sharing with third parties. This could disrupt the business model of these platforms.

Similar concerns were raised by the U.S. Securities and Exchange Commission or Australian Securities and Investments Commission (ASIC), highlighting potential conflicts with securities laws. An example is 𝑺𝒕𝒐𝒄𝒌 𝑩𝒂𝒕𝒕𝒍𝒆 Order.

𝐋𝐞𝐠𝐚𝐥𝐢𝐭𝐲 𝐃𝐞𝐛𝐚𝐭𝐞 & 𝐈𝐧𝐝𝐮𝐬𝐭𝐫𝐲 𝐅𝐨𝐫𝐞𝐟𝐫𝐨𝐧𝐭:

The legality of fantasy stock games, revolving around 𝐬𝐤𝐢𝐥𝐥 𝒗𝒔. 𝐜𝐡𝐚𝐧𝐜𝐞, has been a topic of discussion for a long time. In 2016, we participated in a televised debate on ZEE Business on a similar controversy regarding 𝐒𝐭𝐨𝐜𝐤𝐑𝐚𝐜𝐞 𝐆𝐚𝐦𝐞 then from the 𝑺𝒆𝒄𝒖𝒓𝒊𝒕𝒊𝒆𝒔 𝑳𝒂𝒘 𝑷𝒆𝒓𝒔𝒑𝒆𝒄𝒕𝒊𝒗𝒆, sparking a SEBI press release on 30.08.2016 cautioning the securities market. Also see Prof. Umakanth Varottil‘s blog at 𝐈𝐧𝐝𝐢𝐚𝐧 𝐂𝐨𝐫𝐩𝐨𝐫𝐚𝐭𝐞 𝐋𝐚𝐰 (https://shorturl.at/j3pAj) for carrying quick analysis then.

In a recent circular of May 24, SEBI directed stock exchanges, clearing corporations, and other registered intermediaries to cease sharing live market data with third parties, except as necessary for the orderly functioning of the securities market. As per SEBI, market price data can be shared for investor education and awareness activities and no monetary incentives should be offered to participants in these activities.

𝐄𝐱𝐩𝐞𝐫𝐭 𝐎𝐩𝐢𝐧𝐢𝐨𝐧:

Mr. Sumit Agrawal of Regstreet Law Advisors & former SEBI Officer suggests his insights with LiveMint newspaper viewing that the new regulations could hinder these platforms unless they adapt to using 𝐝𝐞𝐥𝐚𝐲𝐞𝐝 𝐝𝐚𝐭𝐚 or 𝐟𝐢𝐧𝐝 𝐚𝐥𝐭𝐞𝐫𝐧𝐚𝐭𝐢𝐯𝐞 𝐬𝐨𝐥𝐮𝐭𝐢𝐨𝐧𝐬. He also cautions about the potential for these internet-based 𝒇𝒂𝒏𝒕𝒂𝒔𝒚 𝒕𝒓𝒂𝒅𝒊𝒏𝒈 games to bypass the regulated market.

The LiveMint Article is attached. Readers are welcome to send their views to Regstreet Law Advisors at info@regstreetlaw.com