Regulatory Alerts2025-02-04
Safer participation of retail investors in Algorithmic trading
The Securities and Exchange Board of India (SEBI) has issued a circular to establish a refined regulatory framework enabling safer algorithmic trading for retail investors through stock brokers. The document mandates that brokers act as principals for algorithm providers, enforce strict API security measures including OAuth and two-factor authentication, and assume full responsibility for investor grievances and compliance. Additionally, it defines specific roles for stock exchanges to supervise algo testing and empanelment, while categorizing algorithms into white-box and black-box types with distinct registration and disclosure requirements effective from August 1, 2025.
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