Algo trading: Sebi tweaks penalty framework

New Delhi: Markets regulator Sebi on Wednesday announced modifications to its framework for imposing penalties on trading members for a high order-to-trade ratio (OTR) in algorithmic trading.

The regulator has eased compliance for certain categories of orders and market participants.

The changes were finalised after taking into account representations from stock exchanges, deliberations with market stakeholders, and recommendations of Sebi’s Secondary Market Advisory Committee.

Under the revised framework, Sebi has decided to exempt a wider range of equity options orders from the penalty framework.

For equity option contracts, algorithmic orders placed within ±40 per cent of the last traded price (LTP) of the premium or ±Rs 20, whichever is higher, will no longer be considered while imposing penalties for high OTR.