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News Topical, Digital Desk : The National Stock Exchange (NSE) has introduced new rules to ensure safe participation of retail investors in algorithmic (algo) trading. These rules are in compliance with the recent guidelines of the Securities and Exchange Board of India (SEBI). In a circular issued on Monday, the NSE has laid down rules for all types of algos created by stockbrokers, algo providers and clients.
According to the circular, stockbrokers can provide their clients access to their trading system through API (application programming interface). For this, clients will have to mandatorily provide a static IP address to the stockbroker, which will be connected with the API tools.
Limit of 10 orders per second This key will be used to connect to the broker's trading platform. Apart from this, all API sessions will have to log out mandatorily before the start of every trading day. NSE has set a limit of 10 orders per second for algos, but the exchange can change this limit if needed. The circular said, "The limit of orders per second will initially not exceed 10 orders per exchange / segment. Stock exchanges can adjust it as per the need, for which the market will be informed in advance." Brokers can set different limits of orders per second for their clients, which should not exceed the prescribed limit. If a client wants to place orders at a speed of more than 10 orders per second, he will have to register his algorithm with the exchange where he wants to use it. "Exchanges will create a simple registration and compliance framework for orders up to a certain limit," NSE said. For algo providers, NSE said all such providers will have to register and be listed with the exchange. If a broker enters into a business or technical agreement with a registered algo provider, it will have to conduct a thorough investigation of the provider and ensure that the provider is not involved in any misconduct or violation of securities laws.
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