SEBI extends timeline for retail algo trading framework, sets glide path for brokers

The Securities and Exchange Board of India (SEBI) has extended the timeline for implementation of its retail algorithmic (algo) trading framework and laid down a phased glide path for stock brokers to comply with the new rules.

In a circular issued on Tuesday, the markets regulator said the new framework, originally scheduled to come into effect from August 1, 2025, will now be fully applicable from April 1, 2026.

SEBI had first issued guidelines on “Safer participation of retail investors in Algorithmic trading” on February 4, 2025. The implementation was earlier deferred to October 1, 2025, after representations from stock brokers and algo vendors.

The regulator said that while some brokers are ready to go live from October 1, others require more time to make system changes following clarifications and modifications to operational modalities issued by stock exchanges in September.

To address this, SEBI has prescribed a glide path with three milestones.

As per the revised schedule, brokers are required to register at least one retail algorithmic product and one strategy with stock exchanges by October 31.

The stock brokers must complete registration of retail algo products and a few strategies coming through APIs, both in-house and through vendors, by November 30, as per the circular.

By January 3, 2026, brokers must participate in at least one full mock trading session with the new functionality.

“Stock brokers, who fail to adhere to the above milestones, shall be barred from onboarding new retail clients for API-based algo trading framework with effect from January 5, 2026,” SEBI said.

Stock exchanges have been instructed to monitor compliance with these deadlines and ensure that brokers, who are not ready to go live from October 1, are advised to provide details of their existing clients as of September 30, 2025, to exchanges.

The regulator said the complete algo framework, including operational modalities issued by exchanges, will become applicable to all brokers from April 1, 2026, SEBI said.