Am sought of appalled at the direction of this discussion.
This is a system problem and needs technical solutions. My proposals:
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Only Limit orders permitted for API orders. No Market or Stop Loss (Limit, Market) orders allowed.
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Broker induces a “speed bump” execution delay for API Orders (up to 1 Minute to match the time taken to place an order manually on an average) for API orders .These delays are only for 1st leg orders and modify orders. It does not apply to cancel orders or exit orders.
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Broker applies rate limits such as 5 orders a minute, 50 orders a day (1st leg orders) for API orders for each client.
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If more than 50 1st leg orders arrive from the same IP address in a day, no further orders will allowed from that IP (This virtually ends all these illegal algo platform entities)
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If algo sellers software is installed on client side, again Point (3) above will curb it.
A combination of client id and/or ip addr will solve the problem for the brokers to check if the order is algo or non-algo. Even if they are algo triggered, the risk or impact will be insignificant, because the rules ensure that algo trading is levelled down to merely a restricted form of automated trading, while API technology is retained for the benefit of disciplined investors and continued innovations in Indian fintech industry.
Providing recognition to Algo sellers and platforms needs a comprehensive new Certification and is unrelated to the technical solution presented above.
Submitting algo details for approval is readily possible… to brokers (esp those with prop desk) or exchanges (esp those executives still around after colo scam) or even to regulators (who get invited to special dinners & drinks and discussions & seminars of institutional players)… after all SEBI, NSE, BSE officials, as public servant, publish their respective networth, private (not official) vacation trips and the all sources of their yearly income in the internet for public scrutiny.
Poovhenden