INSITE - India - May 2024

TIMELINES FOR DISCLOSURES BY SOCIAL ENTERPRISES ON SOCIAL STOCK EXCHANGE FOR FY 2023-24

Summary: The Securities and Exchange Board of India (SEBI) has made it mandatory for Not for Profit Organizations (NPOs) and social enterprises using the Social Stock Exchange (SSE) to submit their annual reports and impact report for the financial year 2023-24 by October 31, 2024. This rule aims to improve transparency and accountability in line with SEBI's disclosure regulations.

In Detail: In a recent Circular No: SEBI/HO/CFD/PoD-1/P/CIR/2024/0059 SEBI, has instructed social enterprises associated with the SSE to provide an 'annual impact report' for the financial year 2023-24 by October 31. This is a change from the previous requirement, which demanded social enterprises to disclose their annual impact report within 90 days after the end of the financial year.

In the circular, SEBI clarified that social enterprises registered or fundraising through SSE are obliged to furnish their Annual Impact Report to SSE by October 31 for FY23-24. Moreover, NPOs registered on SSE, even those with listed securities, are obligated to reveal their annual activities on the exchange for the financial year 2023-24. This directive aims to enhance transparency and accountability within the SSE framework.

Conclusion: SEBI's recent mandate to require social enterprises and NPOs involved with the SSE to submit their annual impact reports is a move that is designed to bolster transparency and accountability within the SSE framework, ensuring that stakeholders have access to crucial information about these entities' activities and their social impact.

Key Links: SEBI | Timelines for disclosures by Social Enterprises on Social Stock Exchange (“SSE”) 

NORMS FOR SHARING OF REAL TIME PRICE DATA TO THIRD PARTIES

Summary: The SEBI released a new circular on May 24, 2024, with stricter rules for sharing real-time price information with outside parties. These guidelines target preventing the misuse of the data, particularly by online platforms offering virtual trading and fantasy games linked to stock market trends.

In Detail: SEBI has issued a recent circular no. SEBI/HO/MRD/MRD-PoD-3/P/CIR/2024/56 which provides some norms for sharing real-time price information with outside parties. SEBI, has noticed a rise in online platforms using real-time stock prices for virtual trading and fantasy games. Although these activities are creative, they carry risks of data misuse and unauthorised rewards. In response, SEBI's Secondary Market Advisory Committee discussed the matter and developed strict rules for sharing real-time price data.

SEBI observed that numerous online gaming platforms and websites are enticing users with virtual trading activities, often providing monetary incentives. This raises concerns regarding the unauthorised utilisation and potential manipulation of real-time price data, posing risks to market integrity.

Norms for Data Sharing: SEBI requires Market Infrastructure Institutions (MIIs) and registered market intermediaries to follow strict rules when sharing real-time price data:

• Restricted Sharing: Real-time data should not be shared with third parties, like online platforms, unless it is essential for a market order or regulatory needs.

• Agreement Requirement: MIIs and intermediaries must make detailed agreements with data recipients, specifying usage purposes to maintain market order.

• Annual Review: The Board of MIIs or market intermediaries must yearly review entities receiving data and their usage activities.

• Lagged Data for Education: MIIs to Share market price data for educational purposes with a one-day delay and no monetary rewards.

• Due Diligence: MIIs and intermediaries must conduct due diligence to prevent data misuse and ensure compliance through strong legal agreements.

The circular also provides for certain MILLs responsibilities such as:

• Setting up needed systems and processes.

• Changing applicable bye-laws, rules, and regulations.

• Informing market participants and sharing circular details on their websites.

The provisions of this circular shall come into effect 30 days from the date of issuance, providing stakeholders with a limited period to comply with the new standards.

Conclusion: SEBI's new rules for sharing real-time price data are crucial for keeping the securities market fair and organised. They limit data sharing and enforce strict compliance to safeguard investors and maintain market stability. MIIs, clearing corporations, depositories, and market intermediaries need to quickly adjust to these rules to prevent data misuse and ensure a safe trading environment.

Key Links: SEBI | Norms for sharing of real time price data to third parties