Regulate, don't stifle

Sebi's proposal to treat all APIs as algo trade is unwarranted

In a consultation paper last week, the Securities and Exchange Board of India (Sebi) proposed regulating retail or third-party algorithmic trading (algos). The regulator believes these modes of trading are risky and there is little understanding of how they function. Sebi says these “can be misused for systematic market manipulation as well as to lure the retail investors by guaranteeing them higher returns”. The potential loss from a failed algo strategy may be huge.

Sebi wants brokers to give inputs to help formulate a policy framework on third-party algo providers. It has proposed to treat all orders based on the Application