The Securities and Exchange Board of India (SEBI) has announced a settlement scheme offering a lifeline to brokers facing regulatory action for their involvement with algorithmic trading platforms. This initiative provides a path to swiftly resolve pending proceedings.
Key features of the scheme:
This move follows SEBI's 2022 circular prohibiting brokers from associating with platforms promising guaranteed returns. Over 100 brokers previously received warnings for allowing APIs from such platforms.
Understanding the Issue: Many trading applications allowed clients to use APIs, granting these applications extensive control over trading accounts, including order placement and cancellation. SEBI's actions aim to curb potentially manipulative practices.
In a separate development, SEBI is conducting a major investigation into Jane Street's derivatives trading activities over the past three years. This far-reaching probe focuses on potential market manipulation of India's benchmark stock indices.
The Investigation's Scope: SEBI is scrutinizing the trading strategies of Jane Street, its Singapore-based affiliate Jane Street Singapore Pte, and its Indian unit, JSI Investments. The investigation centers on algorithmic trading, particularly concerning the NSE's Nifty 50 index and its banking sector counterpart.
Regulatory Context: This investigation underscores SEBI's commitment to regulating the burgeoning derivatives market and ensuring fair trading practices in India.
