Sebi to put a leash on third-party algo providers, to build a new framework

Says unapproved programmes pose risk to market and can be misused for systematic manipulation

The Securities and Exchange Board of India (Sebi) has proposed regulating third-party algorithmic, or algo, service providers, as the regulator said there is little understanding on how they function.

Algo trades account for over 14 per cent trade in the cash market, according to data provided by the NSE. Although, market players say the number could be higher as a lot of algo-oriented trades are not fully captured.

“Since there is limited understanding with respect to the nature of services provided by various algo providers, brokers may obtain from their clients, details of nature and type of services taken from algo providers