Regulations
New ethics code for brokers

To check the flow of illicit funds and other manipulative activities in the stock market,...

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SEBI to check systemic risk

SEBI has put in place rules for the use of sophisticated automated software to prevent systemic risks caused by algorithmic trading used by brokers.
Algorithmic trading refers to orders on bourses that are generated using high-frequency, automated-execution logic.

SEBI said that exchanges should ensure that all algorithmic orders and software-driven automated order-execution engines are routed through broker servers in India and have appropriate risk-control mechanism emanating from algorithmic orders and trades. “The minimum order-level risk controls should include a price and quantity limit check. The price quoted by the order shall not violate the price bands defined by the exchange for the security,” SEBI said.

In an exigency, the stock exchange should be in a position to shut down the broker’s terminal. “Terminals of the stock broker that are disabled upon exhaustion of collaterals shall be enabled manually by the stock exchange in accordance with its risk management procedures,” SEBI said.

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COMMENTS

Lukasz Szyrmer

5 years ago

Circuit breakers are a good idea, keeping things from getting out hand.

Alternative Investments: New norms

A  according to a press statement released by SEBI on 3 April 2012, the capital market...

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