Sebi toughens stand on algo norms

Shrimi Choudhary | Mumbai Sep 23, 2016 11:46 PM IST
The Securities and Exchange Board of India (Sebi) will soon take a call on the proposed checks and balances on high frequency trading (HFT) or algorithmic trading.

The regulator will seek larger public consultation before arriving at any final decision on the issue, said U K Sinha, Sebi chairman, on the sidelines of its board meeting on Friday.

But at the same time, the regulator will not get influenced by a particular section of the market, including the exchanges, and no one can browbeat the decision, he clarified.

"We are not worried about sponsored comments. We plan to have a detailed open consultation. Sebi has an open mind. We will consult everyone," Sinha said.

The said comments of the regulator came in the wake of the National Stock Exchange (NSE) allegedly violating norms of fair access and allowing some brokers to get undue benefit.

On September 9, the Sebi chairman wrote to the NSE board directing it to appoint a third-party auditor to examine the unfair trade practices with respect to algo trades.

Sebi has already floated a discussion paper on algo trading in July, where it has proposed a slew of measures to prevent any such misuse. For instance, it has proposed having separate queues for co-location and non co-location orders and have speed bumps tackle high speed.
Algorithmic trading, or algo trading in market parlance, refers to orders generated at a super-fast speed by use of advanced mathematical models that involve automated execution of trade, while co-location involves setting up servers at the same location as NSE services.

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