NSE issues circular advising fantasy stock trading platforms not to use its data

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The National Stock Exchange (NSE) issued a circular on April 20 to all its trading members advising them against using its data for gaming and virtual trading purposes.

The stock market prediction gaming platforms use exchange data and allow users to earn rewards by predicting the stock market movements. Though no stocks and actual money (apart from the entry fee) are involved the actual stock market data is used by these fantasy stock trading platforms. Some of the apps pose as stock market education platforms, too.

“It has come to notice of the Exchange, that some market participants are using the Exchange data for gaming and virtual trading purposes which goes against the principles of fair and transparent trading,” the NSE stated as per the circular.

“All Trading Members are hereby advised that the use of NSE data is only for legitimate trading purposes by their clients and not for the purpose of gaming and virtual trading,” the NSE warned.

According to Nithin Kamath, founder and CEO of brokerage firm Zerodha, these stock market prediction platforms have a “regulatorily grey business model“. In a blog post on Zerodha, Nithin mentioned that SEBI regulations do not allow for any competition, game or league.

It is indeed true. SEBI (Investment Advisers) Regulations, 2013 state, “No person shall organise or offer any scheme/competition/game/ league on securities or related to the securities market.”

Meanwhile, the NSE had issued ‘cease & desist’ notices to all fantasy stock trading apps in October last year, asking them to stop using NSE data on their virtual gaming platforms.

According to an NSE official, the exchange was ready to provide data (for which it owns the IP) to startups for educational purposes free of cost, however, it said the data could not be used to take money from players in the form of fees for gaming, schemes or competitions.

“A lot of apps are running under the garb of being an educational platform. But at the end of the day, they all are making money via betting, gambling, predictions, creating pools, and so on, that is one of the reasons why they do not source data from authorized sources. No one has done the paperwork,” the NSE official stated at the time, as quoted by YourStory.

According to NSE Data, a unit of the National Stock Exchange of India Ltd, all companies must disclose the identities of the organizations from whom they obtained access to the data and compensate them for any illegal profits made throughout the course of the data’s wrongful usage.