New Delhi, Jan. 7 -- The Securities and Exchange Board of India (SEBI) has proposed a new rule for the use of price data by trading academies and other educators.
In a consultation paper released on Tuesday, the capital markets regulator has sought to clarify any doubts market participants may have on what price data can be used for educational and investor awareness purposes.
The consultation paper comes about a month after SEBI Chairman Tuhin Kanta Pandey was cited as saying in media reports on the launch of the pilot version of PaRRVA, on December 8, that there was an "inconsistency" in two SEBI circulars on use of live-market data and promised to bring in consistency.
The latest consultation paper is in line with this comment.
What does the consultation paper propose?
It proposes to allow the sharing and use of market price data with a lag of 30 days.
This means that if an exchange wants to offer share-price data to educators, and if educators want to use this data to train their students, then they will have to ensure that these stock prices are from 30 days before.
What was the confusion earlier?
SEBI had issued two circulars on live market or price data: one on May 4, 2024, and the other on January 29, 2025.
Both had clearly restricted the use of live market data to trading. But the two had prescribed two different time lags to be maintained. The May 2024 circular said that exchanges can share price data that was a day old for educational and awareness activities. The January 2025 circular said that stock-market educators must use share price data that was three months old.
One circular was for sharing of the data and the other was for its usage. As the latest consultation paper noted, "the two circulars can operate simultaneously". Still, to bring uniformity in regulations, SEBI has made the latest proposal.
Why has SEBI now proposed a lag of 30 days?
According to the consultation paper, SEBI received comments from market participants that a lag of one day was too short and can still be misused, and that three months was too long for training since the data may become irrelevant in a fast-moving market.
Why is the use of live-market data regulated?
The data can be misused by people who claim to be educators but who may, in reality, be running unregistered investment advisories. Typically, they use the live market data in their classes, workshops or seminars and advise students to buy or sell stocks, claiming it is part of training.
There are also those who run gaming platforms that can fool people into thinking that they are making profits in a regulated stock market.
Published by HT Digital Content Services with permission from VC Circle.