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By easing trading standards for algorithms for the commodity derivatives segment, capital markets regulator Sebi on Thursday raised the limit on the number of orders placed per second by a user to 120 from the existing limit of 100.

The new limit will take effect from April 1, the Securities and Exchange Board of India (Sebi) said in a circular.

The decision was made after receiving statements from exchanges, along with the views of Sebi’s subcommittee — Commodity Derivatives Advisory Committee.

“It was decided to allow exchanges to cap the… limit to 120 OPS (order per second) from the current 100,” Sebi said.
Before that, the limit on the number of OPS of a given user ID was 20 orders per second.

Now the exchange can put a limit on the number of orders per second of a particular user ID that does not exceed 120 orders per second.

For the number of orders that exceed the limit set by an exchange, Sebi said the exchange should prescribe economic barriers and inform the regulator.

Furthermore, the exchange must ensure that the limits offered are dependent on the ability to handle the load.

The limit on OPS could be further relaxed by the exchanges based on the perceived increased peak order load and the associated infrastructure capacity upgrade to ensure that the capacity of the stock exchange’s trading system remains at least four times the peak order load. the limit is subject to Sebi’s approval,” it said.

Algorithmic trading or ‘Algo’ in market language refers to orders that are generated at super fast speed using advanced mathematical models that involve automated execution of the trade, and it is mostly used by large institutional investors.

This post Sebi Eases Algo Trading Rules For Commodity Derivatives Segment

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