SEBI tightens algo trading norms

India Infoline News Service | Mumbai |

Stock exchanges need to ensure effective monitoring and surveillance of orders and trades resulting from trading algorithms, SEBI said

Market regulator SEBI (Securities and Exchange Board of India) tightened algorithmic trading norms by making it mandatory for stock brokers and trading members to audit their systems every six months.

System audit of algorithmic trading system should be undertaken by a system auditor who possess any of the following certifications: CISA (Certified Information System Auditors) from ISACA; DISA (Post Qualification Certification in Information Systems Audit) from Institute of Chartered Accountants of India; CISM (Certified Information Securities Manager) from ISACA; CISSP (Certified Information Systems Security Professional) from International Information Systems Security Certification Consortium.
Deficiencies identified during the process of system audit of trading algorithm should be reported by the stock broker / trading member to the stock exchange immediately on completion of the system audit, SEBI said in a circular on Tuesday.

Further, the stock broker / trading member should take immediate corrective actions to rectify such deficiencies.

Stock exchanges would also consider imposing penalties in case of failure of the stock broker / trading member to take corrective action to its system within the time-period specified by the stock exchanges.

Stock exchanges need to ensure effective monitoring and surveillance of orders and trades resulting from trading algorithms. Stock exchanges should periodically review their surveillance arrangements to investigate market manipulation.



 

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