SEBI Algo Trading Rules 2026, Explained

For years, retail algorithmic trading in India sat in a grey area. Third-party platforms connected to broker APIs and sold strategies with little oversight. SEBI's circular of 4 February 2025 on safer participation of retail investors in algorithmic trading changed that, and after a phased rollout the framework became mandatory for all stock brokers from 1 April 2026.

This is a plain-English summary. It is not legal advice; read SEBI's circulars and your broker's notices for the exact requirements.

The main changes

1. Your broker is responsible

Brokers act as principals for algo orders placed through their systems. Algo providers have to be empanelled with the exchange through the broker, and strategies run in an environment the broker controls rather than on an unknown third-party server.

2. Every algo order is tagged

Each approved strategy gets an Algo ID from the exchange, and every order it sends carries that tag. This gives the exchange and broker an audit trail of which strategy sent which order.

3. White box and black box

White box algos have logic that is disclosed and replicable, such as order-slicing tools.
Black box algos keep their logic private. Providers of black box algos must be registered with SEBI as Research Analysts, keep a research report for each algo, and treat any change in logic as a new algo that needs fresh approval.

4. A threshold for do-it-yourself algos

Investors who write their own algos only need to register them with the exchange, through their broker, if they cross an order-per-second threshold. Under the exchanges' implementation standards that threshold is 10 orders per second per exchange per client. Self-built algos registered this way may be used by the investor's family but not offered to others.

5. Tighter API security

Open, unrestricted API access is no longer allowed. Brokers require measures such as static IP addresses, OAuth-based authentication and two-factor checks, and must be able to stop an algo with a kill switch.

What this means for you

If you use or are thinking of paying for an automated strategy, check:

Is the provider empanelled with the exchange through your broker?
If the logic is not disclosed, is the provider a SEBI-registered Research Analyst? Registration numbers for research analysts start with INH.
Does the strategy run through your broker with an exchange Algo ID?
Are you asked to share your login, password or OTP? You never should be.
Are you asked to send money to a personal account, or promised fixed returns? Walk away.

Our guide on how to check a SEBI-registered research analyst walks through the verification step by step.

What about performance claims?

SEBI has also tightened what registered research analysts and advisers can say about past results. Performance may be shown only when it is verified through the Past Risk and Return Verification Agency (PaRRVA) and presented in the prescribed format, with a link to the full verified report. Treat unverified screenshots of profits with suspicion.

Where Amulya Holdings stands

We are applying for registration as a Research Analyst. Until registration and the exchange approvals are in place, we do not offer research, recommendations or automated strategies, and we do not charge for anything. When we launch, strategies will run through your broker, under limits you set, and your money will stay in your own account.

Quick answers

When did SEBI's retail algo trading framework become mandatory?

The framework was introduced by a SEBI circular dated 4 February 2025 and, after a phased rollout, became mandatory for all stock brokers from 1 April 2026.

Do black box algo providers need SEBI registration?

Yes. Providers of black box algos, where the strategy logic is not disclosed to the user, must be registered with SEBI as Research Analysts, maintain a research report for each algo and seek fresh approval if the logic changes.

Do I need to register my own trading algorithm?

Only if it crosses the order-per-second threshold set under the framework, currently 10 orders per second per exchange per client. Below that, a self-built algo used through your broker's API does not need separate exchange registration.

Sources

Education only. This article explains general concepts. It is not research, a recommendation or investment advice, and it does not refer to any security. Amulya Holdings is not yet registered with SEBI. Investments in the securities market are subject to market risks.

SEBI's algo trading rules for retail investors, explained