SEBI Proposes New Rules for Retail Investors in Algo Trading
Table of Contents
Introduction
In this post on retail algo trading, you’ll discover exactly how SEBI’s April 2025 rules will affect you—and how to comply with zero guesswork.
What You’ll Learn
By reading this post, you’ll be able to confidently launch API trades and ensure SEBI compliance—no guesswork.
You will benefit from:
- Clear checklist for retail traders
- Provider-side rules (white-box vs black-box)
- Marketplace guidelines and revenue-sharing insights
Why People Read This (3 Benefits)
- Understand a newly formalized API route for retail algo trading
- Learn how to avoid forced registration by staying within frequency limits
- Discover white-box vs black-box algo rules, licensing needs, and revenue-sharing best practices
What Is retail algo trading?
Retail algo trading refers to automated trade execution by individual traders using pre-defined strategies via APIs. SEBI’s updates finally bring official legitimacy and guardrails to this growing practice.
SEBI’s New Rules Explained
For Retail Traders
- SEBI now recognizes API-based trading for retail, eliminating the need for costly co-location.
- Low-frequency traders (below exchange thresholds) can trade freely.
- High-frequency: must register strategy and tag orders.
- Static IP requirement: This blocks unregistered management of multiple accounts.
For Algo Providers
- Must partner with a broker and register with exchanges.
- Two strategy types:
- White-Box: Transparent logic — RA license not mandatory
- Black-Box: Proprietary logic — requires SEBI RA license, performance reports, exchange-wide tagging and pre-change notification.
- Exchanges had until April 1, 2025 to implement registration frameworks.
For Marketplace Platforms
- Sharing restricted to family/joint-account only.
- Providers need an RA license and must register strategies.
- A Performance Validation Agency (PVA) will audit claimed results once operational.
- Revenue-sharing between brokers and providers allowed—provided no conflict of interest.
Key Takeaways
- You can now trade via APIs without registration—if you stay under the limit.
- Consider white-box strategies for simplicity, or black-box if you’re RA-icensed.
- Marketplaces must comply with RA licenses, registration, and soon, performance validation.
Retail algo trading is now legit and structured—so get ready to experience algo trading.
Next-Step Call to Action
Download the Kosh app and experience Stresless Algo Trading
FAQ (Frequently Asked Questions)
Is Extra Cash a long-term investing strategy?
Yes. It’s designed to steadily build cash over years while minimizing emotional stress.
Do I need to track financial news?
No. The method is fully rule-based. News has no effect on your trade decisions.
Can I use this with any stock?
Yes, this strategy can be used with any stock, though it performs best with volatile, liquid stocks.
Is this safe during a market crash?
Yes. It’s designed for market chaos. The system ensures your cash reserve builds even in falling markets.
Is this automated?
It is automated via Kosh App built by Dozen Diamonds.
