The Securities and Exchange Board of India (SEBI), on December 13, 2024, issued a Consultation paper on Draft Circular on Participation of retail investors in algorithmic trading.
To enhance market efficiency and transparency, SEBI introduced Algorithmic Trading (algo trading) via the Direct Market Access (DMA) Facility, benefiting institutional investors with faster execution, reduced costs, and improved liquidity. Recognizing the growing demand for algo trading among retail investors, SEBI is now working to extend this facility to them with appropriate safeguards.
After consulting stakeholders, including the Intermediary Advisory Committee and Brokers Industry Standards Forum, SEBI has drafted a regulatory framework aimed at defining the rights and responsibilities of investors, brokers, algo providers, and Market Infrastructure Institutions (MIIs). The draft circular, inviting public comments until January 3, 2025, proposes measures to enable retail investors to trade using algos with necessary protections.
