SEBI Extends Deadline for Implementation of Algo Trading Safety Measures for Retail Investors [Read Circular]

The Securities and Exchange Board of India (SEBI), through a circular dated July 29, 2025, has extended the deadline for implementing new rules designed to ensure safer participation of retail investors in algorithmic trading.

These rules were originally outlined in an earlier SEBI circular dated February 4, 2025, and were scheduled to come into effect from August 1, 2025. However, based on feedback and multiple requests from stock brokers and market participants, SEBI has now postponed the implementation date to October 1, 2025.

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What Are the New Rules About?

The February 2025 circular introduced a framework to regulate algorithmic trading (also known as algo trading), especially where retail investors use automated tools and APIs to place orders. The framework aims to protect small investors from risks arising due to high-speed trading practices and to ensure transparency and control over algorithmic strategies offered by brokers.

Why Was the Deadline Extended?

SEBI stated in the new circular that it had received representations from stock brokers and ISF (Investor Service Framework) participants, who requested more time to comply with the new requirements. The market intermediaries cited operational and system preparedness challenges.

SEBI agreed to give stakeholders two additional months to complete their preparations to ensure a smooth transition without disrupting market functioning or inconveniencing investors.

What Stock Exchanges and Brokers Must Do

Under the new circular, SEBI has directed all recognized stock exchanges to:

1. Inform their members and market participants about the revised timeline.
2. Publish the circular on their official websites.
3. Update their bye-laws, rules, and systems to reflect the new compliance date.

These steps must be completed before the new effective date of October 1, 2025.

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