Interesting, but I assume the per order value is way more for API traders.
I hope, nothing will be impacted for people like me. I have my own system to place orders via API. I create the system myself and use it only for myself.
I provide liqudity to the market, I reduce inefficiencies in the market. People like me are very important to make the markets better. I hope Nithin sir, you will raise this point to SEBI, and protect API for normal users.
@nithin Sir, what is your opinion on this? Do you support API algo traders who wrote their own code? If yes, please let us know and are you supporting our voice reach to SEBI?
It seems really stupid, If SEBI bans people who wrote their own code to place orders.
Thank you!
The moneycontrol article is vague on this. But the person (Dharrmik) who spoke to SEBI directly, says SEBI is planning to ban people who wrote their own code.
https://twitter.com/DharrmikThakker/status/1756344884988989618?s=19
I don’t see the logic and I don’t know how this will improve the market efficiency. I am an algo trader, and I help make the markets efficient, which is beneficial for me and everyone else.
If SEBI bans people who wrote their own code: I need to do one of these 3 things:
1.) Write unofficial code to place order
2.) Employ 20-30 people, and my code tells them in real time about the company, quantity, price, buy/sell order type, and they place order manaully.
3.) Buy NSE Co-location and do algo trading there, if it is allowed.
I trade mostly in equity, I help make stock market more efficient. Whatever I am doing with Zerodha API Is not harming anyone.
1st and 2nd option seems stupid. Should I already start working on 3rd option, If the ban is coming? So my trading won’t stop. Swtiching to Co-location should take a lot of months. I am earning in 9 figures yearly, so I guess I can afford this. But my statergy are not extreme latency sensitive, so I am not considering co-location for now. But my statergy needs orders to be executed between 200-500ms, so I still need API access. i can’t trade manually
We are still figuring the details. We will update here once there is more clarity in terms of the direction the regulator wants to go towards.
He is an interested party (strategy/platform provider). His perception might be colored…
I didnt get the feeling (from what I read) that they want to ban all self-use of API.
Both these points point to the issue of “advertised” algos which in the event of a misfire can create serious market trouble. But I really don’t understand why the focus on individual traders with their custom programs? for example i don’t even use an algo I just use the API in my system where when i want to trade i just type in shorthand what i want and the trade all details and this is executed immediately … I don’t want a primitive method of having to look through instruments and finding the right one … I like my system and my accountability. No thank you I just don’t trust any algo strategy someone else has written even if it has the certificate from SEBI on compliance. Sorry!
Hi @JJJ,
I’ll summarise the regulators’ concerns in general apart from ready-made strategies from algo platforms-
Currently, all APIs offered by brokers are open, this cannot continue and the regulators will want to know the source of the order. This would require API orders coming in to be tagged with the algo ID.
The current algo registration process was created keeping HFT strategies in mind that usually have a post-trade RMS to reduce latency. Exchanges are working on a process to simplify this to cover retail algorithms/systematic order execution.
Disclosure of risks, adequate RMS checks, rate limits on order flow, etc being informed to the retail user before they enter into algorithmic trading.
To add on, being open could be an issue only for those using APIs for random people. One person using APIs for their own personal use may not be impacted.
yes this is my use case. But if someone willing shares keys with others how can it be distinguished from this use case ? You could have 1 ip sending orders for many, but that’s probably not fool proof.
totp as a 2nd factor auth fails here because we can get totp via code too.
But something like a physical rsa device might be acceptable ? That would atleast require the user to share key every time its needed or if he gives up his rsa device itself, then still someone will still need to copy from device.
I don’t know if there is any fool proof way, maybe Zerodha tech can find some way.
The market regulator is only trying to stop algo sellers who promise unrealistic returns to retail traders with its move to regulate API-based algorithmic trading, according to a source who is working closely with the regulator.
The regulator is highly unlikely to interfere with retail traders who aren’t selling algos to others, the insider added.
Doesn’t look good if they are discussing about imposing restrictions on retail traders who run their own algos.
@nithin
Has Zerodha proposed “licensing hassle” for retail traders using API for personal use?
@nithin @MohammedFaisal Thank you so much for answering my queries earlier but can you provide us more context on this news article we see? Should individual retail traders go through the muck of exams to use an api … like for real?
Very disappointing. As an individual trader, why do I need a license to place order via API? No country does this.
I am using my own money. I am using my own code. I am making market efficient.
I am not carrying a GUN! I am just using a simple API!! What is this man? What’s the logic?
To punish few scammer algo providing platforms, you are punishing thousands of innocent people? What type of justice is this?
Government of India is making rules like this on algo trading, AI models, can’t trade outside India etc. Stop giving me reasons to leave INDIA please!
According to “someone” apparently the data discussed in the committee shows that not many retailers are using custom algos … my logic is that an api is a bridge to build a lot of things not just to take trades but also to give ideas on when to take a trade by an analysis software … no 3rd party algo will reach the level of customization required for an individual … classic throw the baby out with the bathwater attitude , sigh …
Lot of the articles on moneycontrol have no substance. I am sure everybody knows that they do a lot of paid articles . Anyways we should wait to see if any legit source says this. Also would like to know about points zerodha made at this meeting. Also if their aim is to regulate algo sellers then mostly new rules will impact them. They surely can’t have exams for this for retail level.That would be funny . It would create so many issues. For e.g. if someone has a HUF account then who is eligible to give the exam. @nithin can you please update. Thanks
That is something all of us can agree on. You need to have a lot of control reading their clickbait articles.
Its revenue loss for all the intermediaries. Most likely will not get passed.
I can’t comment on the article, but our stance hasn’t changed. Anyone using it for themselves should get it, and anyone commercially selling it should go in for approval.
@nithin you had once gone into a fair bit of detail on how to get into fully automatic algo trading by registering as an authorised person and getting a dealer terminal.
Does the new proposal by SEBI, to regulate players like tradetron and retailers alike, in any way affect the framework above?
This was in 2015 before Kite connect was around. 
Hopefully not.