Market regulator Securities and Exchange Board of India (SEBI) has approved the settlement application of 111 stockbrokers for their association with algorithmic trading platforms that allegedly promised assured returns, drawing a line under a wide-ranging regulatory action through a special settlement scheme introduced last year.
The market regulator said the cases stemmed from an earlier examination into certain algo platforms that were found to be marketing trading strategies with claims of 'guaranteed returns' or 'consistent profits'. SEBI noted that the application programming interfaces (APIs) of as many as 122 registered stock brokers were integrated with such platforms, raising concerns over violations of regulatory norms governing broker conduct.
Following the probe, SEBI had initiated adjudication proceedings against the brokers for alleged violations of its September 2, 2022 circular on algo trading and provisions of the SEBI (Stock Brokers) Regulations, particularly those relating to integrity, fairness, and due diligence.
To address the large number of similar cases and reduce regulatory burden, SEBI introduced the ‘Settlement Scheme on Association with Certain Algo Platforms, 2025’ . The scheme allowed eligible brokers to settle pending proceedings by paying a prescribed settlement amount without admission or denial of guilt.
The scheme was initially open from June 16 to September 16, 2025, and was later extended by a month until October 16 following requests from market participants. According to SEBI, 111 entities opted for the scheme within the stipulated timeline.
Each of these brokers paid a settlement amount of Rs 1 lakh, resulting in total collections of Rs 1.11 crore. The list of entities includes a wide spectrum of the broking industry—from large, well-known players such as Zerodha, ICICI Securities, HDFC Securities and Angel One to mid-sized and regional brokers.
In its order, SEBI said that in respect of these 111 applicants, it “shall not continue the proceedings already initiated” and will also not initiate any further action for the specified violations. However, the regulator clarified that the settlement is subject to certain conditions and can be revoked if any misrepresentation is discovered or if settlement terms are breached.
“The passing of this order is without prejudice to the right of SEBI to take appropriate action, including reopening the proceedings, in case any representation made by the applicants is found to be untrue or if there is a breach of undertakings,” the order noted.
In recent years, SEBI has tightened norms around algo trading amid concerns that unregulated strategies and misleading claims could expose investors to significant risks.
The September 2022 circular explicitly barred brokers from associating with platforms that offer or market algorithmic strategies with assured returns, and mandated stronger oversight over API-based integrations. The latest settlement order underscores SEBI’s intent to enforce these rules while also using settlement mechanisms to efficiently resolve enforcement backlogs.
Also read: Over 4,000 NBFCs remain non-compliant with PMLA norms, yet to register on FIU-IND portal
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