Why Security Exchange Board of India is planning to regulate Algorithmic Trading in the country? Discuss (200 Words)
Refer - Business Line
Enrich the answer from other sources, if the question demands.
IAS Parliament 3 years
KEY POINTS
· Algorithmic trading or Algo trading is computer assisted buying and selling of stocks.
· It is also known as automated or programmed trading since pre-programmed computer strategies execute buy and sell trades depending on set parameters, instructions or market pattern and conditions.
· The key purpose of algo trading is speed of order execution. It takes several seconds when humans punch buy and sell traders.
· Around 50 per cent of daily trading volume in Indian stock markets is through an advanced form of algo trading where computer programmes are executing trade orders based on pre-defined strategies.
· SEBI and stock exchanges regulate and monitor broker terminals but the algo programmes deployed by traders did not require any exchange approvals so far as there were no rules.
· But SEBI now believes that unregulated/unapproved algos pose a risk to the market and can be misused for systematic market manipulation as well to lure the retail investors by guaranteeing them higher returns.
· Algo programmers are selling their strategies like assured return products. Algo trading became controversial in 2015 when it was revealed that NSE gave preferential access to a few algo traders.
· SEBI wants every algo trading strategy and programmes to be approved by the exchanges before they are deployed by traders.
Manish 3 years
Please review for 250 Words - (15 marker)
IAS Parliament 3 years
Good attempt. Keep Writing.
prem prince 3 years
please check
IAS Parliament 3 years
Rekha 3 years
Kindly review mam/ sir
IAS Parliament 3 years
Try to explain the flowchart briefly. Keep Writing.
