SEBI extends timeline for retail algo trading norms, new deadline set for August

The Securities and Exchange Board of India (SEBI) has granted more time for implementing standards on algorithmic trading for retail investors. The new framework, originally set to take effect from April 1, 2025, will now come into force from August 1, 2025.

SEBI’s decision follows a request from stock exchanges, which sought additional time to finalise the implementation standards in consultation with the Brokers’ Industry Standards Forum (ISF).

To ensure a seamless transition, stock exchanges have been directed to take necessary steps, update their systems, and amend relevant regulations. Brokers will also be required to comply with these standards and ensure the proper implementation of SEBI’s guidelines.

SEBI had introduced these regulations on February 4, 2025, to safeguard retail investors as algorithmic trading gains popularity. Algo trades, which rely on computer programs to execute orders, offer advantages such as speed and lower transaction costs.

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However, SEBI has mandated that brokers act as principals while algo providers function as their agents, using broker-provided APIs.

Additionally, all algorithmic orders will be tagged with unique identifiers for audit purposes, and algo providers must be empanelled with stock exchanges. Retail investors developing their own algorithms will also need to register them if they exceed a specified order-per-second threshold.