AST MONTH, THE Securities and Exchange Board of India (Sebi) proposed significant changes to its framework governing algo trading. To recap quickly, algorithmic trading, or algo trading, refers to any trading activity that automates trades, and does not require manual intervention to place any orders, or monitor prices.
There are two ways in which one can carry out algo trading. The straightforward method is to use the algorithms provided by the stock broker. The other route is through application programme interface (API), which enable electronic systems to connect with each other. Think of it as a data pipe which carries your algorithm. APIs enable the transmission of information, and as a result, a third party can create a code that will execute itself on the broker's platform.
In the context of algo trading, third parties provide their algo on, say, platform X, which is connected to the broker's platform through an API. Thus, orders placed by the client on platform X get passed on to the broker. Now, while a broker can identify that an order is coming in through an API, it cannot verify that the order is an algo order.
In 2021, concerned with the rise of unregulated algos, Sebi proposed to treat all API orders as algo orders. This was a flawed departure from its mission to encourage innovative and digital solutions in the securities market, as the regulator's proposal would have saddled connectivity between brokers and other sophisticated players linked to them for non-algo purposes. It appears that the proposal has been scrapped, and after extensive consultations with the industry, a more practical approach has been proposed.
With respect to API orders, Sebi has suggested that an order per second (OPS) threshold be specified, and that all API orders above such threshold would be treated as algo orders.
This story is from the January 02, 2025 edition of Financial Express Kolkata.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the January 02, 2025 edition of Financial Express Kolkata.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Sign In
Eight jawans among 9 killed in Naxal attack
IN THEIR BIGGEST strike on security forces in Chhattisgarh in two years, Naxals blew up a vehicle using an improvised explosive device weighing 60 to 70 kg, killing eight security personnel and their civilian driver in Bijapur district on Monday, police said.
Cautious Outlook for Auto Companies in Q3
• No segment shows growth except tractors
SBI Cards: Credit costs to improve
● Management strengthens risk assessment measures
Banks: Slower loan growth a worry
Asset quality concerns ease
In search of a growth driver
DIFFICULT TO IDENTIFY A SECTOR THAT HAS POTENTIAL TO LIFT ECONOMY TO A HIGHER TRAJECTORY
Tesla and Waymo should learn from '24 air crashes
If you yearn for a future where you can travel from place to place in safety and comfort, some of the major transport events of 2024 might feel like a setback. Don't give up hope.
Judicial Overreach Unwarranted
High Court Order Staying Religare Enterprises AGM Risks Undermining Shareholder Rights, Regulatory Authority, and Market Confidence
Weak drivers
Budget should have measures to resuscitate the middle class
Donald Trump denies he will pare back tariffs plan
PRESIDENT-ELECT DONALD Trump denied a Washington Post report that his aides are considering narrowing his tariff plan so that it would only apply to limited specific critical imports.
Trump Haunts Central Banks Primed for Wary Rate Cuts in 2025
GLOBAL CENTRAL BANKERS are poised to cut borrowing costs further in 2025, but only warily—and with a keen eye on the policies of incoming US President Donald Trump.
