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ARTICLE · 14 MARCH 2023

Regulating Algo Trading–Two Attempts, Two Misses?

The Securities and Exchange Board of India (SEBI) recently issued a circular addressed to stock exchanges and brokers in relation to performance/return claimed by unregulated platforms...

IndiaCorporate/Commercial Law

The Securities and Exchange Board of India (SEBI) recently issued a circular addressed to stock exchanges and brokers in relation to performance/return claimed by unregulated platforms offering algorithmic (algo) strategies for trading.

In its circular, the regulator notes that algorithmic trading services and strategies are being offered to investors for automated execution of trades and are marketed, claiming high returns on investment by various unregulated platforms. Some of the algo strategies are even assigned ratings, which SEBI rightly believes to constitute mis-selling of services and strategies to unsuspecting investors. SEBI has further noted that in certain instances, stock brokers are providing algorithmic trading facilities through such unregulated platforms.

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