It is necessary to have a robust system in place for complicated algos like that of black box algos.

The key weakness of the circular is the lack of the robust safeguards against the manipulative algorithmic practice, specifically spoofing which is a tactic where large, fake orders are placed to deceive the market.

Considering the fact that before these guidelines, the entire algo trading market for retail investors thrived in an unregulated sphere, one must appreciate this circular for its timely intervention in this sector.

SEBI has shown a number of apprehensions regarding retail investors getting involved in algo trading, citing possible manipulation of the market, unfair access to market information, and excessive volatility.

As SEBI opens the gates of algorithmic trading to retail investors, this blog critically examines the circular.