SEBI Algorithmic Trading Rules: What Retail Quant Traders Need to Know
Algorithmic and API-based trading has grown exponentially among Indian retail traders. SEBI continues to formulate clear regulatory standards to ensure market integrity and investor protection.
1. Broker API Architecture
Discount brokers offer REST and WebSocket APIs (e.g., Zerodha Kite Connect, Angel One SmartAPI, Upstox API) allowing authorized trading clients to execute orders programmatically. Key requirements include:
- Mandatory Two-Factor Authentication (TOTP) for automated session generation.
- Exchange-level rate limiting on order placements and quote subscriptions.
- All orders routed through the broker's centralized Risk Management System (RMS) before hitting exchange matching engines.
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