Sebi Pushes Back Retail Algo Trading Rollout

The Securities and Exchange Board of India (Sebi) has given stock brokers more time to roll out its new rules for algorithmic (algo) trading by retail investors, according to a recent circular issued by the market regulator. The guidelines, which were to take effect from October 1, will now be implemented in phases so that brokers and vendors can rework their systems smoothly.

The framework for safer participation of retail investors in algo trading was first announced in February this year, with operational details released by exchanges in July. However, after fresh clarifications and modifications were issued in September, many brokers argued they needed additional time to make the required changes. Sebi’s latest move responds to these industry requests while keeping investor protection at the centre.

A Glide Path For Brokers

Instead of a single deadline, brokers will now follow a three-step path. By October 31, 2025, they must register at least one retail algo product offered through an API, either built in-house or via third-party vendors. By November 30, they are expected to register more products and strategies with the exchanges.

The third milestone requires brokers to join at least one mock trading session under the new rules by January 3, 2026, and share proof of participation. Those who miss this stage will not be allowed to onboard new retail clients for API-based algo trading after January 5, 2026. Exchanges have been directed to closely monitor adherence to these milestones.

Final Deadline In April

While firms that are ready can still go live from October 1, Sebi has made it clear that the entire framework will become mandatory from April 1, 2026. From that date, all brokers will have to comply with the February circular as well as the operational standards set by exchanges. Brokers unable to go live immediately are also required to report the number of clients they serve as of September 30, 2025.

The market regulator has underlined that the new framework will be introduced gradually, with the aim of avoiding disruption while safeguarding the interests of small investors. Interest in algorithmic trading among retail participants has surged in recent years, fuelled by the promise of faster execution and efficiency. Regulators have warned that unchecked automated systems could leave investors exposed to unforeseen risks. Sebi’s decision to introduce the framework in stages is aimed at giving market participants enough time to adapt, while keeping investor protection at the centre of the process.