Brokerage houses said market regulator Sebi’s proposal to treat all orders emanating from Application Programming Interface (API) as algorithmic or algo may restrict the growth of such trading in India.
In market parlance, algo trading refers to any order that is generated using automated execution logic.
TradeSmart CEO Vikas Singhania said that the need of the hour is to regulate the nascent algo market, especially since the media has reported several cases of retail customers losing money on the basis of false promises made by sellers. “However, in its effort to mitigate some of the bad cases, SEBI is putting in place constraints that may restrict the growth of algo trading in India. APIs for brokers to be provided if the conditions mentioned in the consultation paper are implemented. However, Rahul Shah, co-head (research, Equitymaster) said the proposal will help ensure that no one is able to tamper with the system.
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