Sebi comes up with guidelines on order-to-trade ratio for algo trading

Markets regulator Sebi on Wednesday put in place new framework on order-to-trade ratio (OTR) of algo orders placed by stock brokers.

Algorithmic trading or 'algo' in market parlance refers to orders generated at a super-fast speed by the use of advanced mathematical models that involve automated execution of trade, and it is mostly used by large institutional investors.

In a circular, the Securities and Exchange Board of India (Sebi) said it has decided to modify existing OTR framework after receiving requests from the stock exchanges.

Under the framework, stock exchanges may be permitted to introduce additional slabs up to an OTR of 2,000