Ensuring Fair Algo Trading: NSE's Guidelines and Recent Penalty Updates

August 14, 2023

Algo trading is like using computers to automatically buy and sell things in the stock market. This helps the market work better. An organization called SEBI makes rules to make sure this kind of trading is fair and safe. NSE also makes rules and penalties to make sure people follow the trading rules.

In 2018, NSE said each computer doing algo trading should have a special ID. This ID helps watch over them and make sure they're behaving correctly.

Then, in 2019, NSE started giving penalties to people who didn't follow these rules. If they didn't use the special ID, they had to pay money as a fine.

Recently, in June 2023, NSE made new penalties for algo trading. These penalties are for things like making too many orders, changing orders too much, or not using the right IDs. The fines start at Rs. 20,000 and can go up to Rs. 1,00,000 per day depending on how bad the mistake is.

NSE is trying to make sure algo trading is fair and safe. They want people to follow the rules, and they're making penalties to encourage that. This helps investors feel more secure about trading in the stock market because it's being watched and controlled properly.