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ARTICLE · 07 FEBRUARY 2025

SEBI Circular: Safeguarding Retail Investors In Algorithmic Trading

IndiaLaw LLP
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On February 4, 2025, the Securities and Exchange Board of India (SEBI) issued a significant circular aimed at ensuring the safer participation of retail investors in algorithmic trading.

IndiaFinance and Banking
Rahul Sundaram
Rahul Sundaram

On February 4, 2025, the Securities and Exchange Board of India (SEBI) issued a significant circular aimed at ensuring the safer participation of retail investors in algorithmic trading. This move comes as a response to the growing interest of retail investors in algo trading and the need to refine the existing regulatory framework to protect their interests and maintain market integrity.

Background and Public Consultations

Algorithmic trading, or "algo trading," involves using automated execution logic to generate orders. SEBI first provided guidelines on algo trading in 2012 and has since introduced measures to strengthen controls in this area. Recognizing the increasing demand from retail investors to participate in algo trading, SEBI decided to review and refine its regulatory framework. This process involved extensive consultations with stock exchanges, brokers, and algo providers. A discussion paper was issued in December 2021, and further discussions were

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