As the regulator tightens rules, experts say it will increase compliance burden and operational costs for algo traders

SEBI tightens algorithm trading rules to protect retail investors, requiring registration and supervision of providers by stock exchanges.

Under the new guidelines, Sebi facilitated the participation of retail investors in algorithmic trading (algo trading). At present, only institutional investors are allowed to put in algo trading, which provides significant advantages of timed and programmed order execution.

The Securities and Exchange Board of India (SEBI) has paved the way for retail investors to participate in algorithmic trading (algo trading), offering faster order execution and enhanced market liquidity.

Brokers can provide algo trading facility to retail investors only after obtaining requisite permission from stock exchanges for each algorithm, SEBI said in a circular

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.

A 2-factor authentication of API has been made mandatory for all brokers. Retail investor can now work only with vendors empanelled by the exchange.

Algo trading refers to orders generated using automated execution logic. Such trading provides significant advantages of timed and programmed order execution.