Sebi offers settlement for brokers facing action in algo trading

The Securities and Exchange Board of India (SEBI) has offered a settlement scheme for brokers who were undergoing regulatory action for being associated with algo trading platforms.
The scheme is going to apply to brokers dealing with proceedings before the regulator and the Securities Appellate Tribunal. The Sebi move is to provide a route to the brokers to conclude these matters in an expeditious manner. The scheme which commences on July 16 will conclude on September 16, Sebi said in a statement
This scheme aims to provide a settlement opportunity to stock brokers linked with specific algo platforms against whom proceedings have already been initiated by Sebi and are currently pending before any authority or forum like the Adjudicating Officer, Securities Appellate Tribunal or the courts.
The concerned stock brokers may settle the proceedings and seek an expedited conclusion to their cases by availing of the benefits of this scheme. However, Sebi clarified that actions initiated against stock brokers, who choose not to avail this settlement opportunity, will continue in accordance with the law.
Over 100 brokers earlier reportedly received Sebi warnings for allowing APIs (application programming interface) of an algo provider, which allegedly provided assured returns.
Earlier, trading applications provided by several brokers allowed their clients to use API — a software that allows two applications to communicate with each other. After they are installed, APIs get the authorisation to perform a host of functions in the trading account, such as placing buy and sell orders or cancelling orders.
Sebi issued a circular in 2022 prohibiting stockbrokers from any association with platforms offering assured returns.
Market regulator Sebi is conducting an extensive investigation into Jane Street's derivatives trading activity over the past three years, examining whether the global quantitative trading giant attempted to manipulate India's benchmark stock indices, according to a Reuters report.
The probe — said to be SEBI's most far-reaching into an international trading firm — comes amid the regulator's broader efforts to temper the heightened activity in India's booming derivatives market.
The investigation is focused on Jane Street, its Singapore-based affiliate Jane Street Singapore Pte, and JSI Investments, its Indian unit. SEBI is reviewing the firms' algorithmic trading strategies, particularly in relation to the NSE's Nifty 50 index and its banking sector counterpart.

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