Sebi chief urges stronger risk controls amid rise in algo, HFT trading

Sebi Chairman Tuhin Kanta Pandey warns that as algorithmic and high-frequency trading grow, intermediaries must balance speed with safety, ensure compliance, and protect investor trust

The rise of algorithmic and high-frequency trading brings efficiency but also demands robust risk controls, real-time monitoring and compliance safeguards, Securities and Exchange Board of India (Sebi) chairman Tuhin Kanta Pandey said on Tuesday.

 

Speaking at the Morningstar Investment Conference India 2025, Pandey said rapid technological change, growing market interconnectedness and rising investor expectations have created fresh complexities for financial intermediaries.

 

“Intermediaries today navigate a landscape defined by rapid technological change, interconnected markets and rising stakeholder expectations,” he said.

 

He cautioned that while technology improves speed and access, it also magnifies risks.

 

“Firms must safeguard sensitive client data and critical infrastructure from sophisticated threats,” Pandey said, adding that third-party and outsourcing risks have expanded with greater reliance on technology vendors and service providers.

 

Pandey said intermediaries must ensure operational resilience and maintain business continuity amid volatility and digital transformation. Meeting client expectations for faster and more personalised service, he added, should not come at the cost of sound systems and strong grievance redress mechanisms.

 

His comments come at a time when the Multi-Commodity Exchange faced a four-hour long delay in trading due to a tech outage.

 

Speaking on the matter at the sidelines of the event, Pandey said, “Recurrence of such problems is not good. We will be able to comment after a proper analysis. There are stages of root cause analysis. One has to be submitted in 24 hours and one in 48 hours. We will follow the SOP.”

 

The Sebi chief also detailed that the regulator is reviewing the Stock Brokers Regulations 1992 to make it more relevant, simple, and streamlined. The market regulator had earlier floated a consultation paper on the same and its approval is expected in December.

 

The Sebi chief said the regulator continues to strengthen the market’s foundations through measures to enhance investor protection and integrity. These include active monitoring of social media for misleading content, direct pay-outs to client accounts to prevent misuse of investor assets, the Mitra platform for tracking inactive mutual fund folios, and a framework to ensure safer participation of retail investors in algorithmic trading. 

Pandey emphasised that the true differentiator for market institutions will not be how swiftly they comply with regulations but how meaningfully they internalise them.

 

“The strongest and most respected firms will be those that see compliance not as a ceiling, but as a foundation, building upon it a culture of integrity, resilience and transparency that earns investor trust every day,” he said.