"Algorithmic Trading: SEBI Proposes Retail Algo Trading Framework

 "Algorithmic Trading: SEBI Proposes Retail Algo Trading Framework

Algorithmic trading automates buy and sell orders based on predefined conditions, enabling precise execution. Previously, only institutional investors had access to this through Direct Market Access (DMA).

Key Highlights of the Regulatory Framework:

• Categorization of Algorithms:

  • White-box: The algorithm's logic is disclosed and replicable (e.g., Execution Algos).
  • Black-box: The algorithm's logic is not disclosed to the user and cannot be replicated.

• Trading Limits for Retail Traders: Retail traders will be required to adhere to trading limits set by exchanges (which are yet to be determined).

• Registration of Algo Providers: While algo providers are not directly regulated by SEBI, they must register with exchanges and collaborate with brokers to offer algos."

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