NSE has rolled out a significant framework to bring structure and accountability to retail algorithmic trading, following SEBI’s directions. This move is aimed at democratizing algo access for retail users while ensuring a secure and monitored environment for all stakeholders.
Here’s a quick summary of what the new guidelines mean for different stakeholders:
For Individual Traders:
- API Access: traders can continue using APIs but now must provide static IPs which will be mapped to API keys
- OPS Threshold: You can send up to 10 orders per second (OPS) without registering your algo with the exchange.
- Algo Registration: If you’re deploying high-frequency strategies (i.e. exceeding 10 OPS), your algo needs to be registered and each order will be tagged with an exchange-issued ID.
- All API sessions shall be compulsorily logged out every day before the start of the next trading day
For Algo Providers:
- Must be empaneled with exchanges.
- All algos need to be registered and tagged with a unique ID, regardless of orders per second
- Such unique algo IDs may be used across members once registered
- Can have commercial and technical tie-ups with brokers—but must be disclosed to exchanges.
- “Hosting algos on broker-owned infrastructure is mandatory”
For Brokers:
- As a broker, we can create our own algos and offer them to our clients.
- Each of these algos needs to be registered with the exchanges and a unique exchange algo ID will be assigned.
This new framework is a big step towards making algo trading safer and more accessible for everyone. It brings clear rules for traders, algo providers and brokers, ensuring better control, transparency and security. With these guidelines, retail investors can now use algos with more confidence, knowing there’s a strong system in place to monitor and manage risks.
Access the circular here - https://nsearchives.nseindia.com/content/circulars/INVG67858.pdf