Algorithmic trading is evolving rapidly, and SEBI’s latest framework, effective from August 1, 2025, aims to create a safer, more transparent environment for retail traders. Whether you are a trader developing your own algorithms, using third-party services, or accessing trading APIs, it is essential to understand the new compliance requirements.

This checklist provides a structured overview of the regulatory requirements for traders, algo providers, brokers, and stock exchanges.
Checklist for Retail Algo Traders
For Traders Developing Their Own Algos
- Monitor trading volume. If the algorithm crosses the specified order-per-second threshold, registration with the exchange through a broker is mandatory.
- Self-developed algorithms can only be used for personal and family accounts, including spouse, dependent children, and dependent parents. Commercial use is not permitted.
- Brokers will provide API access with restrictions, including whitelisted API keys and static IP authentication.
- Open API access is prohibited. Authentication must follow broker-enforced security protocols.
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For Traders Using Third-Party Algos
- Ensure the algo provider is empaneled with the stock exchange before utilizing their services.
- If using a black box algorithm, verify that the provider is registered as a Research Analyst and maintains detailed research reports.
- Review and confirm all charges, ensuring transparency in subscription fees and brokerage costs.
- Any issues related to algorithmic execution must be addressed directly with the broker, who is responsible for managing complaints.
For Traders Using API-Based Trading
- Obtain approval from the broker for API access, as unrestricted access is no longer allowed.
- Use only broker-approved API keys, which must be whitelisted and linked to static IPs.
- Implement two-factor authentication (2FA) as per SEBI’s security guidelines.
- Be aware that brokers will monitor API usage to ensure compliance with trading regulations.
Checklist for Algo Providers (Vendors, Fintech Companies)
- Algo providers must be empaneled with the stock exchanges before offering services to traders.
- Brokers are required to conduct due diligence before onboarding an algo provider.
- If offering black box algorithms, providers must be registered as Research Analysts and maintain detailed research documentation.
- All charges, including subscription and brokerage fees, must be fully disclosed to users.
- Ensure compliance with SEBI regulations regarding API integration and work exclusively with brokers following the prescribed security protocols.
Checklist for Brokers Offering Algo Trading
- Each algorithm offered to clients must receive approval from the stock exchange before deployment.
- Every algorithmic order must be tagged with a unique identifier from the exchange to ensure traceability.
- API access must follow strict authentication protocols, including OAuth, two-factor authentication, and static IP whitelisting.
- Brokers are responsible for addressing all complaints related to algo trading and must establish mechanisms for dispute resolution.
- Unauthorized API access and suspicious trading activities must be monitored and prevented.
- A kill switch mechanism must be in place to disable malfunctioning algorithms immediately.
- Brokers must ensure the con
- confidentiality of trader strategies through encryption, non-disclosure agreements, and data security measures.
Checklist for Stock Exchanges
- Exchanges must define the empanelment criteria for algo providers to ensure compliance and security.
- Continuous surveillance of all algorithmic orders and API-based trading activity must be maintained.
- The ability to halt suspicious algorithmic activities through a kill switch mechanism must be enforced.
- Guidelines on algo categorization, including white box and black box algorithms, must be established.
- Brokers must be supervised to ensure adherence to authentication and security protocols for API-based trading.
- A process for the fast-track registration of execution algorithms should be implemented to prevent delays.
Implementation Timeline
- By April 1, 2025, the Broker’s Industry Standards Forum (BISF) will finalize the implementation standards in consultation with SEBI.
- By August 1, 2025, the new regulatory framework will take full effect.
Final Thoughts
SEBI’s updated guidelines introduce greater accountability, security, and transparency in algorithmic trading. Traders, algo providers, and brokers must align their practices with the new compliance requirements to ensure continued access to algorithmic trading.
Retail traders must verify that their algorithms and API integrations comply with SEBI’s rules. Algo providers must register and disclose trading logic where required, while brokers must implement strict security and oversight measures.
Understanding and following this compliance checklist will help traders and market participants navigate the evolving regulatory landscape effectively.