Introduction
In a huge step toward data democratisation and transparency, the Securities and Exchange Board of India ("SEBI") recently released a detailed framework to share market data for research and analysis. This draft circular1, designed to supersede the extant Data Sharing Policy 2018, marks a vital shift in how the Market Infrastructure Institutions ("MIIs") deal with and disseminate data in the securities markets of India.
Background and Context
The proposed policy originates from SEBI's identification of certain lacunae in the existing framework and its need to smooth data sharing. Perhaps one of the most crucial aspects of the new framework has been data ownership and authenticity. Crucially, SEBI's Market Data Advisory Committee (MDAC) pointed out that SEBI should only share data of which it is directly the owner. In contrast, the MIIs themselves should form their data-sharing policies for the information that they are creating. This new draft policy represents a landmark development in data access for businesses, particularly fintech companies, data vendors, and research firms. The framework addresses a crucial market need by establishing clear protocols for data sharing, which could significantly impact how companies access and utilise market data for their operations and innovations.
The Two-Basket Approach
The most striking feature of the proposed framework is introducing a two-basket approach to data categorisation. The first basket will consist of publicly shareable data, including aggregated and analysed information, as well as regulatory-mandated disclosures. This category, which protects data privacy while providing researchers access to insightful market data, is a significant step towards openness. Furthermore, SEBI's attempt to offer free data in manageable quantities—up to 2GB—does demonstrate a dedication to market research and academic study.
The second basket is Data Privacy and Protection, which includes confidential and sensitive information with clear boundaries around what data cannot be shared outside. This would include, for example, KYC information, trade logs, and holding details that would directly or indirectly identify some individuals or entities. Careful segregation here reflects an approach that is balanced in terms of access to the data and privacy protection issues that are becoming increasingly worrisome in financial market data security.
Implementation Framework
A particularly noteworthy aspect of the proposed policy is its requirement for uniformity in data categorisation across similar MIIs. Because of this standardisation, data access and analysis will probably be more efficient, and researchers will find it simpler to traverse among various data sources. The procedure is further streamlined for researchers by the need for MIIs to provide sample files and specimen data-seeking request forms on their websites. This standardisation will be particularly beneficial for businesses operating across multiple market segments, as they can develop consistent data acquisition and processing strategies across different MIIs. Companies can now plan their data infrastructure and resources based on clear, uniform categorisation rules.
Potential Impact on Market Research
This is the policy's most promising effect on market analysis and research. The approach may lead to better market analysis and scholarly research by providing academics with more access to data while upholding appropriate privacy protections. This might help in better understanding the dynamics of markets and lead to evidence-based policy-making in the future.
Challenges and Considerations
From a business perspective, implementing this new framework presents several operational considerations, such as (a) Companies will need to develop new systems and protocols for accessing and processing market data; (b) The cost implications of accessing large data volumes need to be factored into business planning; (c) Firms shall carefully evaluate which data requests fall under the free category versus those that might incur costs; (d) Businesses need to consider how the strict segregation of sensitive data might impact their product development and service offerings
Looking Ahead
For businesses in the financial sector, this first comprehensive draft data-sharing policy opens new possibilities for innovation and market analysis. The framework's clear distinction between public and private data, combined with provisions for both free and paid access, creates a structured environment for businesses to develop new products and services. Companies that can effectively leverage this new data access framework, particularly the freely available data, may find themselves better positioned in an increasingly data-driven market.
Footnote
1. Consultation paper on draft circular for "Policy for Sharing Data for the Purpose of Research /Analysis", Securities and Exchange Board of India, available at: SEBI | Consultation paper on draft circular for "Policy for Sharing Data for the Purpose of Research /Analysis" Click here to provide your comments .
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