Capital market regulator Sebi has issued a public notice on June 9 regarding a settlement scheme for brokers who had violated rules by associating with unregulated algo trading platforms.
As per the public notice, the settlement will be open between June 16 and September 16, and Sebi will issue further details on June 16 through a note detailing the frequently asked questions (FAQs) regarding the scheme.
Moneycontrol had reported on March 20 that Sebi was planning such a scheme for the proposed settlement.
The scheme will be called Settlement Scheme for Association with Certain Algo Platforms, 2025, and as per a public notice, the scheme would provide a “settlement opportunity to such stock brokers associated with certain algo platforms against whom proceedings have been initiated by Sebi and are pending before any authority or forum, viz. Adjudicating Officer / the Securities Appellate Tribunal/ Courts”.
The scheme would provide a settlement opportunity to such stock brokers associated with certain algo platforms against whom proceedings have been initiated by Sebi and are pending before an authority or forum.
By availing the scheme, stock brokers may settle proceedings against them and seek expeditious conclusion, the notice said. The actions initiated against the stock brokers who do not avail this opportunity for settlement shall be continued against them in accordance with law, said Sebi.
Last year, Sebi had issued show-cause notices to more than 110 stock brokers, including major players like Zerodha, 5Paisa Capital and Motilal Oswal Financial, after observing that unregulated platforms were offering algo-based trading strategies marketed with claims of assured returns. Platforms like Tradetron facilitated these trades by linking their algorithms to broker systems despite Sebi’s explicit directives against such associations.
As the violations were more of an industry-wide practice than a major infraction, Sebi is likely to notify a lower settlement amount possibly of Rs 1 lakh for each case under the scheme.
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