Every broker providing API connectivity to clients for trading should have the capability to effectively monitor or control the Threshold OPS limits for algos not requiring registration
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ANI
The National Stock Exchange (NSE) has issued implementation standards for safer participation of retail investors in algorithmic trading.
In a circular issued on Monday, the exchange elaborated on norms for algos provided by stockbrokers, algo providers and those generated by clients.
“Stockbrokers may provide their clients with API access to their trading systems. To gain access, clients must mandatorily provide the stockbroker with a static IP address (es) which will be mapped to the API keys from which they will connect to the brokers’ trading platform via API,” the circular said.
Multiple API keys can be given to the same client (for connecting to different segments, running different algos). When the clients have taken multiple API keys, the broker will ensure that non-registered algos are run only through one of the predefined API keys. Other API keys can be used only for registered algos.
Clients can use API connectivity only for implementing automated trading systems, computer algorithms, or other software-based trading solutions to automate the buying and selling of securities/contracts on the secondary markets. Such API connectivity should be equipped with the necessary RMS checks by the brokers.
“The Threshold Order Per Second is initially set at not exceeding 10 orders per second per exchange/segment and may be adjusted by the stock exchanges as needed after due notice to the market. If the flow of algo orders from the client to the broker via API is below the defined threshold per exchange, the client will not be required to register for algorithmic trading from the broker’s system,” the NSE circular said.
Every broker providing API connectivity to clients for trading should have the capability to effectively monitor or control the Threshold OPS limits for algos not requiring registration.
If a client wishes to place orders at a speed exceeding the Threshold Order Per Second (OPS), they must register their algorithm with each exchange where the algorithm is intended to be used. The exchanges will formulate a simplified registration and compliance framework for orders up to a certain threshold.
To register the algorithm, the client must provide the necessary details to the broker, who will forward this information to the relevant exchanges. The exchanges will register the algorithm and issue a registration ID, which will be communicated by the broker to the client. The orders will be tagged with the exchange-provided algorithm ID(s).
Brokers may also create and offer various algorithms to their clients. Each algorithm created by the broker will be registered with the exchange, and an exchange-specific algorithm ID will be obtained.
All algo providers must be empanelled with exchanges in accordance with the guidelines set by each exchange. The algo providers must be registered with each exchange where the algorithms are intended to trade.
The broker may enter into a commercial arrangement with the algo provider, which may include sharing of fees. The broker should carry out adequate due diligence in relation to the algo provider and ensure that the algo provider is not involved in any misconduct or violation of securities laws.
Published on May 6, 2025
