The National Stock Exchange (NSE) has rolled out a detailed set of implementation standards to ensure safer participation by retail investors. This comes as part of a broader compliance push aligned with recent guidelines from capital markets regulator SEBI.
In a circular issued on Monday, the NSE clarified that the new norms apply across the board ' whether the algorithm is provided by brokers, third-party algo providers, or generated by the clients themselves.
One of the key requirements introduced is mandatory API access control. Retail investors seeking API-based trading will now need to furnish a static IP address, which will be mapped to the specific API keys used to access brokers' trading platforms. This measure is expected to reduce misuse and tighten tracking.
In another shift, all API sessions must be logged out daily, before the next trading session begins. This rule is designed to minimize risks from unauthorized or unattended algo activities lingering beyond intended trading hours.
The NSE has also put a cap on the maximum order placement speed ' setting the limit at 10 orders per second per exchange segment. This Threshold Order Per Second is, however, flexible and may be revised by the exchange with appropriate market notice. Brokers are allowed to impose more granular client-level thresholds, so long as they stay within the prescribed ceiling.
Clients hoping to breach the 10 Order Per Second (OPS) limit will now need to register their algorithms with each respective exchange. The NSE promises a streamlined compliance framework for this, albeit with more eyes on such high-frequency activities.
On the backend, the exchange is also tightening the leash on algo providers. All such entities will now have to be formally empanelled and registered with the NSE. And brokers partnering with them ' whether for commercial or technical reasons ' must run comprehensive due diligence checks to ensure the provider has a clean regulatory record.
This regulatory tightening comes amid concerns over the unchecked rise of DIY retail algo trading, which, without adequate guardrails, can introduce systemic risks or provide an unfair edge in the market.
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