SEBI issues circular on terms of usage of market data

Ashish M. Shaji

04 Mar, 2022

Recently the capital markets regulator, SEBI, directed market intermediaries to make available free and easy access to securities market data. SEBI has asked market intermediaries that such data should be made available to users free of charge for viewing purposes and also for download in prescribed format. Let’s know more on this development.

Background of the matter

The Securities and Exchange Board of India had restructured its advisory committee on market data in order to obtain policy measures pertaining to securities market data access and privacy. This advisory committee is called the Market Data Advisory Committee, which is now chaired by Mr. S Sahoo, professor at National Law University (NLU), Delhi, and former chairperson of the Insolvency and Bankruptcy Board of India (IBBI).

The Market Data Advisory Committee was required to identify segment wise data perimeters, needs and gaps in the available data. They were also required to suggest privacy and access regulations for such data. After a detailed deliberation on the public dissemination of data, this committee notified of a framework for market intermediaries with respect to terms of use of data provided by different sources in the Indian securities market.

Who are “Market Intermediaries” as specified in the SEBI circular?

Those that are associated with securities market in any way are called as market intermediaries, as per Section 11 and Section 12 of the SEBI Act 1992. Market intermediaries include the following:

• Stockbrokers;
• Sub-brokers;
• Portfolio managers;
• Custodian of securities;
• Merchant bankers;
• Share transfer agents;
• Depositories;
• Registrars to an issue;
• Foreign institutional investors;
• Investment advisers;
• Underwriters;
• Venture capital funds;
• Asset management companies;
• Credit rating agencies.

What does the SEBI’s circular on terms of usage of market data state?

The Securities Exchange Board of India has announced a framework for market intermediaries, including the data sources in the securities market with regard to the terms of data usage provided by data sources in the Indian securities markets.

SEBI said in its circular that the data provided by data sources in the Indian securities markets pursuant to regulatory mandates for reporting and disclosure in public domain should be made available free of charge to users for viewing the data and also for download purposes in the format specified by regulatory mandate for reporting and their usage for value addition purposes.

The reason behind this decision

SEBI, while explaining the reason behind this decision said that financial markets have been data rich and data driven traditionally. With the growth of financial markets, the volume and type of data have also increased tremendously over the year, and it is expected that it will continue to increase rapidly. SEBI added that with the increase in size and complexity of the financial markets, addressing the information asymmetry and ensuring adequately informed investors and multiple stakeholders in the market can’t be overemphasised.

Moreover, considering the huge variety and volume of information in the markets, the value added service providers have a critical role to play in making available such information to the stakeholders in a comprehendible form. Hence with a view to enhance the quantum further and to ease the accessibility and usability of data disseminated in public by data sources in the Indian securities market, including the MIIs (Stock and Commodity Exchanges, Clearing corporations and Depositories etc.), SEBI reviewed, through the Market Data Advisory Committee, the extent of free access and usage of data being given in the public domain or by the respective sources of data in the Indian securities market.

In this regard, the regulatory intent of public dissemination of data in a disclosure based regulatory regime was deliberated by the Market Data Advisory Committee in detail, hence, taking into account the Market Data Advisory Committee’s deliberations and recommendations on this issue, SEBI directed the market intermediaries to make available free and easy access to securities market data.

Conclusion

SEBI believes that this move will enhance the ease of accessibility and usability of data disseminated in public by different data sources in the securities market. The provisions of the SEBI circular issued in this regard shall come into force with immediate effect. One can view this circular on the official SEBI website at www.sebi.gov.in under the category “Circulars”.

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