SEBI has overcome a major shortage of algorithm-trading rules, which could have taken advantage of illegal algo providers. For this, the market regulator has made a small change in the rule. SEBI introduced a consultation paper on 13 December 2024. After this, Moneycontrol highlighted a reduction in the rule. This deficiency is mainly associated with the limit from which the order of higher is considered an algo order.
Revised rules issued on 4 February
Sebi The revised rule was issued on February 4 after the change. In this, the market regulator has said that the applications of the brokers programming interfaces (Api) It is necessary to have a tag of algo order with all the orders coming through. For this, the unique identity provided by the stock exchange will have to be used. This is completely different from the system that was reported in the consultation paper.
It was said in the first rule
In the consultation paper released on December 13, it was said that only the tag will have to be used in such an order, which will be more than the limit. It said that through the API provided by the brokers to the clients, all orders of more than the fixed limit per second would be considered as algo order and they would have to tag the tag of unique identity provided by the exchange.
Illegal algo providers do not get caught
According to the consultation paper, this meant that only such orders would be required to be tagged that would be fired with a special speed. Those who keep the information inside the industry had told Moneycontrol that many illegal algo providers would be saved from getting caught. The reason for this is that most of his algo has very few orders. Many times their number is 2 or 3 in an hour. They rarely fire several orders in a second.
SEBI confirmed the final draft rule
This meant that the unarjigard algo market would be saved from coming to the monitoring of the regulator. Moneycontrol had said that if such an order is not identified as an algo order, then their providers do not need to follow the rules that have been designed to protect the interests of investors. They could also sell strategy that would have been difficult for investors to understand. This deficiency in SEBI’s final draft has been removed.