Sebi allows retailers into algo trading from Aug with strict track & trace rules

MUMBAI: The markets watchdog Sebi has allowed retail investors to trade using algorithmic or algo trading putting in place stricter norms that demand strict track and trace rules to protect them from mishaps amid rising demand. In a circular issued on Tuesday, the Securities and Exchange Board of India said brokers can provide algo trading facility to retail investors only after obtaining requisite permission from stock exchanges for each algorithm. "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," the circular said, adding the facility will be applicable from August 1. A study published by the regulator last September showed that during fiscal 2024, algorithmic trading accounted for 97% of foreign investors' and 96% of proprietary traders' profits in futures and options.