SEBI extends timeline for implementing new safer rules for retail algos

On July 22, the National Stock Exchange (NSE) had issued detailed operational modalities for empanelment of algo providers and registration of retail algo.

The Securities and Exchange Board of India (SEBI) has extended the deadline for implementing the new rules for retail algo trading to October 1, based on feedback received from market participants. The norms announced in February were earlier scheduled to come into effect from August 1.

“SEBI has received various representations from stock brokers and ISF participants requesting for an extension of timeline for implementation of provisions of the circular. Based on the same, it has been decided that the circular shall come into effect from October 01, 2025, in order to ensure smooth implementation without any disruption to the markets players and investors,” stated the SEBI circular issued on Tuesday.

In February, the capital market regulator had issued a circular titled ‘Safer participation of retail investors in Algorithmic trading’ following the increasing demand for algo trading by retail investors.

In order to facilitate safer participation of retail investors in algo trading, with Stock Brokers and Stock Exchanges playing the required roles in risk management, it has been decided to review and refine the existing regulatory framework to ensure proper checks and balances, to safeguard investor interest as well as integrity of the market,” stated the SEBI circular issued on February 4.

The aim of the new norms was to clearly lay down the rights and the responsibilities of all stakeholders – investors, brokers, algo providers/vendors, and the Market Infrastructure Institutions (MIIs) like exchanges, depositories and clearing corporations.

On July 22, the National Stock Exchange (NSE) had issued detailed operational modalities for empanelment of algo providers and registration of retail algo, as part of the overall initiative by the regulator and the exchanges to create an ecosystem for safe participation of retail investors in algorithmic trading.

Among other things, the exchange said that all algorithmic trading strategies will have to be mandatorily registered and be given a unique identification. The revised unique identification mechanism will help the exchange identify algo orders from client Direct API (Application Programming Interface).

It further said that all algo providers will have to be empanelled with the exchange before registering their algo product, and the application and registration of algo strategy will need to be done through a trading member, before an algo ID can be assigned by the exchange