Securities market regulator SEBI is taking the help of an external technical team to tackle issues related to algorithmic (algo) trading.
Speaking to the media on Monday ahead of demitting office, SEBI Chairman UK Sinha said, “ I would like to assure you that a very highly evolved and expert technical team who is not a part of SEBI — is looking at the trading data in India to find out what are the possible ways in which the matter can be solved.”
Sinha observed that India was one of the very few countries which had a mechanism to control algo trades. “The International Organisation of Securities Commissions (IOSCO — the apex body of securities regulators worldwide) has been debating it for almost five years. Some of them have come out with discussion papers but none of them have been able to come out with final regulations because this is a very difficult area. SEBI has been able to come out with some minimal regulations on algo,” he said.
“We are reviewing whether the penalty should be enhanced further (for high order to trade ratio). The difficulty in this debate is two-fold. One is it is surrounding a highly technical area. Another difficulty is that the people who comment about this are also the people who have a conflict of interest — they are either technology providers or they are themselves using it. I don’t blame them because they have put in a lot of money and effort into this,” he added.
On the issue of India’s largest exchange NSE following SEBI’s directions on algo trading , Sinha said, “My dilemma is in matters where we are taking some action against any entity, I would not like to name any entity, we cannot discuss with you or with outside people about what action is being contemplated or what is the evidence that we have got.
“However, I would like to assure through you, the people in this country, that SEBI got its own examination conducted and based on the examination it gave certain directions; majority of the directions have been implemented but some of those directions have not been implemented. So, SEBI is following up this matter with the concerned agencies and this matter will be taken to its logical conclusion.”