Mint Explainer: Sebi’s beef with virtual trading apps

livemint.com:

Here’s a quiz: If you had access to real-time stock price data, what would you do? These are your options: You could gamify the stock trading experience using virtual money. On top of that, you could start a contest, charge a small entry fee, and distribute prizes. And maybe also launch a social trading platform where users can show off their stock-picking skills.

That’s exactly what a few startups did and profited from. But this has triggered the ire of the Securities and Exchange Board of India. In a recent circular, Sebi instructed stock exchanges, clearing corporations, and depositories (collectively referred to as market infrastructure institutions), and other registered intermediaries to stop sharing live market data with others unless required for the orderly functioning of the securities market.

“Market price data may be shared for investor education and awareness activities without offering any kind of monetary incentive to the participants with a lag on one day," Sebi said in its circular. Mint dives into what this means for a section of the startup sector that has gaming apps and websites offering virtual trading services or fantasy trading games using real-time stock price data. Fantasy trading games run paid contests using live data feeds of stock prices, while social trading platforms allow users to reveal their actual stock-pickings and share-market performance, which others could take cues from.