SEBI Allows Algos For Retail Investors, Brings Responsibilities On Brokers And Exchanges
The market regulator, the Securities and Exchange Board of India, on Tuesday came out with guardrails around how retail investors can access algo trading.
The provisions involve a triangular sort of relationship between the stock exchanges, brokers, and the algo providers. At first the brokers will act as the principal and the algo providers will be like their agents. Meanwhile, the stock exchanges will provide a unique identifier for all the orders generated through these algos.
In case a retail investor is working on their own algo and using it eventually, they will have to get it registered as well in case they exceed the specified order per threshold. However, they will only be able to let their immediate family members use that algo.
In a system that will not be regulated by the SEBI directly, the stock exchanges will have the algo providers registered with them. Post this, only the registered providers will be onboarded by the brokers, and they will have the responsibility to oversee any complaints related to algos.
The brokerages will have to come up with a two-factor authentication and API control access for the providers.
SEBI has categorised algos into two types: white-box (execution algos, where the logic is transparent) and black-box (where the logic is hidden from users). Black-box algo providers must register as research analysts and maintain detailed research reports.
The new framework will be implemented in phases, with industry standards finalised by April 1, 2025, and full implementation starting from August 1, 2025. Stock exchanges must ensure compliance by amending their rules and informing brokers.
-
Indians Are Travelling, But Not Every Journey Is A Holiday | The Week In Whys
Pilgrims, patients and working women are the real travellers, and the system hasn't quite caught up with them.
-
Getting To Work Costs Women More | The Reason Why
It is not just about women paying more than men. It is about women paying much more in cities than in villages.
-
AI Bias In Investing Cannot Be Eliminated, But It Can Be Governed
Framing is a particularly important example as identical financial information presented in terms of gains rather than losses can lead an LLM to reach a different assessment.
-
Joining The Dots | Dark Skies, Steady Diya: Why Hope Holds This Diwali
With war, a weak rupee and foreign outflows weighing on sentiment, policymakers at the NDTV World Summit and market veterans at NDTV Profit Ignite: Diwali Edition offered the same advice: stay invested and filter out the noise.
-
The Curious Case of Equitas Small Finance Bank And A CEO Who Quit For Stock
PN Vasudevan believes persistent investor concerns over a perceived conflict of interest had become a governance overhang on Equitas Small Finance Bank's stock, even as the lender improved profitability and asset quality.
-
Talking Points This Week: AI Cash Burn, A Tiger Comeback And An India That Still Finds Its Own Path
India is not immune to higher oil or tighter global liquidity, yet its earnings base is broader, its domestic policy levers are still available.
-
Foreign Investors Own Half Of HDFC Bank and ICICI Bank. An LTCG Cut Could Matter Most Here
Foreign portfolio investors have US$115 billion parked in HDFC Bank, ICICI Bank. If the government cuts long-term capital gains tax, Jefferies says returning foreign money could land here first.
-
'Never Seen This Level Of Negativity': Sandeep Tandon Says The Next Rally May Be Closer Than You Think
Veteran investor Sandeep Tandon says foreign selling is easing, large-caps are due a comeback and mid-caps are crowded, while he turns positive on gold, power and pharma this Diwali.
-
Indians Stay With Family, Not In Hotels | The Reason Why
India still lacks enough clean, reliable and affordable hotels for budget-conscious travellers.
-
The Economic Imperative: Analysing The Material Driving Force Behind India-Canada Strategic Reset
This economic complementarity is further reinforced by deep institutional investment ties and talent mobility, which form the bedrock of the bilateral framework.
