Capital markets regulator Sebi on Tuesday extended the timeline by two months to October 1 for implementing the framework on facilitating the participation of retail investors in algorithmic trading, which provides advantages of faster order execution and improved liquidity.
At present, only institutional investors are allowed to put in algorithmic (algo) trading, which provides significant advantages of timed and programmed order execution.
In February, Sebi issued a circular on safer participation of retail investors in algorithmic trading. The provisions of the circular were to come into effect from August 1, 2025.
The regulator has received various representations from stock brokers and ISF participants requesting a timeline extension for implementation of provisions of the circular.
"Based on the same, it has been decided that the circular shall come into effect from October 1, 2025, in order to ensure smooth implementation without any disruption to the market's players and investors," Sebi said in its circular.
Under the new framework, retail investors will get access to the approved algos only from the registered brokers, which will safeguard the interests of these investors.
The facility of algo trading would be provided by the stockbroker only after obtaining requisite permission from the stock exchange for each algo.
"All algo orders shall be tagged with a unique identifier provided by the exchange in order to establish audit trail and the broker shall seek approval from the exchange for any modification or change to the approved algos," the regulator had stated.
Brokers will be solely responsible for handling investor grievances related to algo trading and the monitoring of APIs for prohibited activities.
For better oversight, any algo provider providing the facility to place algo orders with brokers, through API, will require to be empanelled with exchanges.
At present, only institutional investors are allowed to put in algorithmic (algo) trading, which provides significant advantages of timed and programmed order execution.
In February, Sebi issued a circular on safer participation of retail investors in algorithmic trading. The provisions of the circular were to come into effect from August 1, 2025.
The regulator has received various representations from stock brokers and ISF participants requesting a timeline extension for implementation of provisions of the circular.
"Based on the same, it has been decided that the circular shall come into effect from October 1, 2025, in order to ensure smooth implementation without any disruption to the market's players and investors," Sebi said in its circular.
Under the new framework, retail investors will get access to the approved algos only from the registered brokers, which will safeguard the interests of these investors.
The facility of algo trading would be provided by the stockbroker only after obtaining requisite permission from the stock exchange for each algo.
"All algo orders shall be tagged with a unique identifier provided by the exchange in order to establish audit trail and the broker shall seek approval from the exchange for any modification or change to the approved algos," the regulator had stated.
Brokers will be solely responsible for handling investor grievances related to algo trading and the monitoring of APIs for prohibited activities.
For better oversight, any algo provider providing the facility to place algo orders with brokers, through API, will require to be empanelled with exchanges.
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