No Bad Selling Algo Trading Strategies, Sebi Warns Brokers

Bombay : Securities brokers who provide algorithm-based trading facilities offered by unregulated platforms have been warned by market regulator Sebi to remove any content that references the past or future performance of such algorithm by September 9.

This is to deter mis-selling to investors and to protect their interests. “It has been noticed by Sebi that some unregulated platforms offer algorithmic services/strategies to investors for automated trade execution. These services and strategies are marketed with “claims” with high returns on investment.

“In addition, ‘ratings’ have been assigned to strategies that could lead investors to be lured by such claims. This may amount to mis-selling of such services and strategies to investors,” the Sebi circular dated September 2 reads. .

Sebi cautioned brokers offering algorithmic trading not to make any direct or indirect reference to past or expected future returns. He ordered stock exchanges to amend their bylaws and regulations to implement SEBI’s provisions in this regard.

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