Sebi: The Securities and Exchange Board of India (SEBI) has prepared a settlement scheme for stock brokers. This scheme has been presented as a solution for the notice issued to more than 110 brokers. These brokers are accused of being associated with Algo trading platforms. This list includes many big brokers like Zerodha, 5paisa, Motilal Oswal.

This is the case

SEBI had received information that many untouched platforms like Tradetron are claiming algo-based trading strategy by connecting with the broker system claiming the returns. It is against SEBI rules. In June 2022, SEBI had warned for this and issued a circular this year, instructed the brokers to break the relationship with such platforms. Even after this, many brokers were promoting algo trading by joining with such platforms. Condolence notice has been issued to them by identifying 110 such brokers.

SEBI Settlement Scheme

SEBI board meeting is going to be held on 24 March. It will talk on the settlement scheme. To avoid a long legal battle, SEBI is preparing to bring this scheme, in which brokers can settle a fine of Rs 1-2 lakh. Brokers who take advantage of Sakim will have to apply to SEBI.

What is Elgo Trading?

Let us know that Elgo Trading works as an investor in the stock market, whose job is to make investors maximum profit. The word Elgo comes from the algorithm. Trading decisions in Elgo Trading takes software instead of investor and place a bye or cell order.

You can understand as an example- if you want to buy shares in a company when its price is the lowest than the average of the last 100 days. For this, you can create a computer program, which will monitor the share price and as soon as the price comes on the range according to your condition, this order will place. In the same way, if the price is done, then the rating of two is given. SEBI has trouble with algo trading because many times algo developers lure more returns, which is a clear violation of SEBI rules.

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