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Sebi to work on algo rules with ‘open mind’: Chairman

Amid intense lobbying by brokers and other market entities on proposed curbs on super-fast algo trading, regulator Sebi today said it is moving with an "open mind" on the issue and would not be browbeaten by any "sponsored comments".

By: | Mumbai | Published: September 23, 2016 8:29 PM
"Those are all sponsored comments. We plan to have a detailed open consultation. Sebi has an open mind. We will consult everyone," Sebi Chairman U K Sinha said here. (Reuters) “Those are all sponsored comments. We plan to have a detailed open consultation. Sebi has an open mind. We will consult everyone,” Sebi Chairman U K Sinha said here. (Reuters)

Amid intense lobbying by brokers and other market entities on proposed curbs on super-fast algo trading, regulator Sebi today said it is moving with an “open mind” on the issue and would not be browbeaten by any “sponsored comments”.

“Those are all sponsored comments. We plan to have a detailed open consultation. Sebi has an open mind. We will consult everyone,” Sebi Chairman U K Sinha said here.

Asked about comments made by various entities against or in favour of the proposed curbs on algorithmic trading to prevent any misuse, Sinha said the regulator is consulting all stakeholders before taking any final call.

“We will do something. We are not worried about sponsored comments. You cannot browbeat Sebi just because you are powerful and noisy,” he told reporters after a board meeting of the market regulator.

Incidentally, the comments come at a time when leading stock exchange NSE has decided to rope in an independent agency, on directions of Sebi, to look into the allegations of providing unfair privilege access to some brokers for its algo trading.

Algorithmic trading or algo in market parlance refers to orders generated at a super-fast speed by use of advanced mathematical models that involve automated execution of trade, while co-location involves setting up servers on the exchange premises.

Sebi has already floated a consultation paper on algo trade, wherein it has proposed various checks and balances to prevent any misuse. However, the trading community is divided on these proposals.

A global trade organisation for derivatives, the Futures Industry Association (FIA), has asked Sebi to reconsider the proposed curbs on super-fast algorithmic trading, saying such measures could be detrimental to market liquidity and increase costs for investors.

Sebi has proposed to introduce resting time for orders, random delays and random speed bumps, separate queues for co- location and non co-location orders for strengthening the regulatory framework for algo trading and co-location facility.

Besides, stock brokers’ forum Association of National Stock Exchanges Members of India (ANMI) has also opposed the idea of any restrictions on algo trade, while BSE Brokers Forum has supported the idea.

Another body, BSE Brokers Forum, has however supported some of the proposals made by Sebi on the algo issue. These include putting limit on order trade ratio, separate queues for algo and non-algo orders and uniform data dissemination.

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