Starting May 27, the charges for orders based on algorithms (algo) in stock exchanges will be double the existing rates.
SEBI said that this would disincentivise those having high order-to-trade ratio using algo. Charges on an algo trade vary among exchanges.
Brokers with repetitive instances of high daily order-to-trade ratio will face additional penalty in the form of suspension of their proprietary trading book.
Algorithmic trading refers to orders generated by use of advanced mathematical models that involve automated execution of trade. It is mostly used by large institutional investors and has raised concerns that algo exposes small investors to possible systemic risks.