Sources:
3. https://nsearchives.nseindia.com/content/circulars/INVG67858.pdf
SEBI has regulated Algo Trading in India with a view to making algo trading safer and more transparent for retail investors and traders.
The new framework clearly defines the roles of:
- Brokers (Trading Members)
- Algo providers (Algo platforms and other fintechs).
- Traders trading with their own self-made algos.
- Traders using Algo platforms.
- Exchanges.
Roles:
1. Brokers (Trading Members):
a. Onboard Empanelled Algo Providers (Algo platforms & fintechs) onto their Infrastructure (if they want to).
b. Provide API access to retail traders building and running their own algos (with a max 10 orders/sec rate limit).
c. Allow retail traders running their own algos, access to the API only via the trader's own Static IP.
c. Discontinue Open API access (currently being used by all Algo Providers).
2. Algo Providers (Algo Platforms):
a. Get empanelled with the Exchanges and operate as per guidelines prescribed by SEBI & Exchanges.
b. Deploy, host and operate the entire algo platform running algos, on the Broker's infrastructure.
c. Register algo strategies and DIY templates with the Exchanges.
3. Traders trading with their own self-made algos:
a. Traders who wish to run their own self made algos and wish to access the Broker's Trading APIs must provide the broker with a Static IP through which their algo orders will be routed.
4. Traders trading with empanelled Algo Providers:
a. Traders who trade with empanelled algo providers that are deployed on the Broker's infrastructure do not have to provide their own Static IP to trade using the Algo Provider's platforms.
5. Exchanges:
a. Define and enforce rules for Brokers, Algo Providers and Traders/Clients/Investors participating in algo trading.
b. Maintain oversight on all operations and all market participants.