The Securities and Exchange Board of India (SEBI) is implementing measures against gaming apps that offer virtual trading services and fantasy games based on real-time share prices of listed companies. This action aims to address the proliferation of these apps, which have emerged due to the high interest of retail investors in stock trading, as reported by the Economic Times.

SEBI has instructed stock exchanges and depositories to cease sharing real-time price data with third parties to control these activities. According to a regulatory official, using such data for educational or entertainment purposes is acceptable, but offering monetary incentives based on virtual stock portfolio performance is not allowed. “Then it’s like dabba trading, which is illegal,” the official stated.

The new measures will not impact media agencies that provide real-time data feeds. However, the SEBI directive effectively ends all platforms offering trading competitions, demo trading, and contracts for difference (CFDs). “SEBI’s circular essentially means that it ends all platforms offering trading competition, demo trading, CFDs, and more,” said Zerodha co-founder Nithin Kamath.

Over the past few years, several stock gaming platforms have been launched in India. These platforms allow users to compete based on fictional trading strategies and portfolios, paying a membership fee to participate, with top performers receiving prizes. Despite warnings from exchanges, some platforms have been found circumventing rules.

“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 allowed, as exchanges earn significant revenue from data dissemination. However, SEBI rules stipulate that no person should offer any game or league related to the securities market.

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

The directive comes in the wake of past incidents, such as the case involving businessman Raj Kundra, where his firm was found using data feeds for gaming activities. SEBI has also observed that some participants may be reselling live data to entities developing gaming apps.

Exchanges will now have to carry out due diligence while sharing data and revise their legal agreements to include provisions preventing any misuse by entities. Market price data may be shared for investor education and awareness activities without offering any kind of monetary incentive to participants, and with a lag of one day.