SEBI Proposes Retail Access to Algo Trading: Public Comments Invited

SEBI proposed a draft circular inviting public input on allowing retail investors to access algorithmic trading. The initiative aims to expand the algo trading framework with necessary safeguards for retail participants. Comments are welcomed by January 03, 2025.

The Securities and Exchange Board of India (SEBI) has issued a draft circular seeking public feedback on a proposal to enable retail investors to engage in algorithmic (algo) trading. Algo trading, characterized by its programmed and timely order execution, promises significant advantages.

SEBI aims to bridge the gap for retail investors eager to harness algo trading while implementing strong safeguards. The introduction of algo trading through the Direct Market Access (DMA) Facility previously highlighted benefits such as expedited order execution, though it was primarily accessible to institutional investors.

Ensuring effective market surveillance, risk management, and investor protection remains essential as the domain evolves. SEBI has been actively regulating this sphere since 2012, but rising demand from retail investors prompts a regulatory framework review with strategic consultations. The proposal outlines two algo types: those with disclosed, replicable logic, and those without. Public feedback is invited until January 03, 2025.

(With inputs from agencies.)