Sebi to launch settlement scheme for brokers linked to algo lapses

Over 100 brokers may need to pay Rs 1 lakh each as settlement amount

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The Securities and Exchange Board of India (Sebi) is set to introduce a settlement scheme for over 100 stock brokers who faced regulatory scrutiny for their association with algorithmic trading platforms promising guaranteed returns.

 

Each broker may be required to pay a settlement amount of ₹1 lakh under the scheme, sources said. The settlement scheme is expected to be notified soon, providing relief to the affected brokers.

 

Sebi has already approved the scheme, which aims to ease the burden on the judicial system. "The settlement amount of ₹1 lakh will be uniform for all brokers," said a person familiar with the developments.

 

The brokers in question had allowed application programming interfaces (APIs) of algo provider TradeTron, allegedly providing assured returns, to be used by their clients. This episode prompted Sebi to strengthen its framework on retail traders using algo platforms, mandating empanelment of algo providers and defining responsibilities for stock brokers and exchanges.

 

Sebi is also considering a standard operating procedure (SOP) for settlement regulations.