**Executive Summary**
This circular, issued by the Securities and Exchange Board of India (SEBI) on September 30, 2025, extends the timeline for the implementation of the SEBI Circular dated February 04, 2025, regarding safer participation of retail investors in algorithmic trading. It outlines a glide path with specific milestones for stock brokers to adopt the required system changes, with strict compliance deadlines. The circular provides clarity and modifications to the initial framework based on feedback from exchanges, stock brokers, and algo vendors.
**Key Points / Main Content**
* **Extension of Timeline:** The implementation timeline for the original circular (dated February 04, 2025) is extended.
* **Go-Live Date:** Stock brokers with ready systems shall go live from October 01, 2025.
* **Milestones for Stock Brokers:**
* **Milestone 1:** Apply for registration of at least one algo strategy for retail algo products coming through API with the exchange by October 31, 2025.
* **Milestone 2:** Complete registration of retail algo products coming through API with the exchange by November 30, 2025.
* **Milestone 3:** Participate in at least one mock session with the new functionality by January 03, 2026.
* **Non-Compliance Consequences:** Stock brokers failing to meet the milestones will be barred from onboarding new retail clients for API-based algo trading from January 05, 2026.
* **Reporting Requirement:** Stock brokers not ready to go live by October 01, 2025, must provide information on existing clients to exchanges by September 30, 2025.
* **Framework Applicability:** The algo framework specified in the February 04, 2025 circular, along with implementation standards, will apply to all stock brokers from April 01, 2026.
* **Stock Exchange Responsibilities:** Exchanges must monitor stock broker compliance, disseminate the circular's provisions, and amend their regulations accordingly.
**Impact Analysis**
**Stock Brokers**
* **Impact:** Stock brokers must adapt their systems and processes to comply with the revised implementation timeline and milestones for safer algorithmic trading.
* **Action Required:**
* Adhere to the specified milestones for algo strategy registration and mock sessions.
* Provide client information to exchanges if not ready to go live by October 01, 2025.
* Adapt systems to be fully compliant with the algo framework by April 01, 2026.
**Stock Exchanges**
* **Impact:** Exchanges are responsible for overseeing the implementation of the revised framework and ensuring stock broker compliance.
* **Action Required:**
* Disseminate the provisions of the circular to members.
* Implement systems for monitoring compliance.
* Amend regulations as necessary.
* Specify calendar for mock sessions for testing of algos.
**Retail Investors**
* **Impact:** Retail investors will benefit from safer participation in algorithmic trading due to the enhanced framework.
* **Action Required:** No action required.
Key Entities Referenced
Securities and Exchange Board of India (SEBI): The primary regulator issuing the circular and responsible for the oversight of securities markets in India.
SEBI Circular dated February 04, 2025 on ‘Safer participation of retail investors in Algorithmic trading’: The original circular whose implementation timeline is being extended by this notice.
Stock Exchanges: Entities that are directed to implement and monitor the provisions of the circular, including dissemination to members and amendments to relevant bylaws.
Stock Brokers: The primary entities affected by the extension of the implementation timeline related to algorithmic trading.
Securities and Exchange Board of India Act, 1992: The legal foundation providing authority for the issuance of the circular.
CIRCULAR
SEBI/HO/MIRSD/MIRSD-PoD/P/CIR/2025/132 September 30, 2025
To,
All recognized Stock Exchanges
Stock Brokers through recognized Stock Exchanges
Madam / Sir,
Sub: Extension of timeline for implementation of SEBI Circular dated February
04, 2025 on ‘Safer participation of retail investors in Algorithmic trading’
1. SEBI issued circular on “Safer participation of retail investors in Algorithmic trading”
on February 04, 2025. The provisions of the circular were to come in to effect from
August 01, 2025. However, based on representation from stock brokers and algo
vendors, timeline for implementation of circular was extended to October 01, 2025
vide circular dated July 29, 2025.
2. The detailed operational modalities for algo framework were issued by exchanges
on July 22, 2025. In this regard, based on the representation received by
exchanges from stock brokers and algo vendors, certain clarifications and
modifications were issued by exchanges in second fortnight of September, 2025.
3. In order to ensure smooth implementation of the framework, SEBI has been
engaging with exchanges, broker associations and algo vendors. During the
discussion, it was informed that majority of the stock brokers require more time to
carry out the necessary changes in their systems on the basis of
clarifications/modifications specified in operational modalities.
4. Accordingly, it has been decided that stock brokers who are ready with the required
systems shall go live w.e.f. October 01, 2025. Further, in order to provide more
time to stock brokers who are yet to carry out the required system changes, a glide
Page 1 of 3path is being provided which shall be adhered to by stock brokers, with the
following milestones:
Milestone 1 –
Retail algo product coming through API (In-house and through vendors) and at
least one algo strategy shall be applied for registration with exchange by 31st
October 2025.
Milestone 2 -
Registration of retail algo products coming through API (In-house and through
vendors) and few algo strategies for retail algo with exchange shall be completed
by 30th November 2025.
Milestone 3 -
Stock broker shall participate in at least one mock session with the new
functionality which is complete in all aspects by January 03, 2026. The calendar
for mock sessions for testing of algos shall be specified by exchanges Stock
broker shall provide evidence to the exchanges regarding the participation in mock
session. In case, stock broker has not participated by January 03, 2026, the said
fact shall be intimated to the exchange.
5. Stock brokers, who fail to adhere to the above milestones, shall be barred from
onboarding new retail clients for API based algo trading framework w.e.f. January
05, 2026.
6. Stock exchanges shall monitor the compliance of stock brokers with the above
stated milestones.
7. Stock brokers, who are not ready to go live from October 01, 2025, are advised to
provide the information regarding the number of existing clients as on September
30, 2025 to exchanges, in the format as specified by exchanges.
8. W.e.f. April 01, 2026, algo framework specified in circular dated February 04, 2025
along with implementation standards and detailed operational modalities (issued
by exchanges) will be applicable for all stock brokers.
Page 2 of 39. Stock Exchanges, are hereby, directed to:
9.1. bring the provisions of this circular to the notice of their members /
participants and also disseminate the same on their websites;
9.2. put in place appropriate systems and procedures to ensure compliance of
the provisions of this circular;
9.3. make necessary amendments to the relevant Bye-laws, Rules and
Regulations for the implementation of the above decision;
10. This circular is issued in exercise of powers conferred under Section 11(1) of
Chapter IV of the Securities and Exchange Board of India Act, 1992, read with
Section 30 of the Securities and Exchange Board of India (Stock Brokers)
Regulations,1992 to protect the interests of investors in securities, to promote the
development of, and to regulate the securities markets.
11. This circular is available on SEBI website at www.sebi.gov.in under the category:
‘Legal → Circulars’.
Yours faithfully,
Aradhana Verma
General Manager
Tel. No: 022 26449633
aradhanad@sebi.gov.in
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