Description

BSE revises the 14th digit identifier system for Location ID registration to distinguish algo and non-algo trading orders, with mandatory compliance by January 31, 2026.

Summary

BSE has revised the 14th digit identifier system used in Location ID registration for dealer terminals. The new classification system better distinguishes between algo and non-algo trading orders. Trading Members must update their Location IDs with the revised 14th digit identifiers by January 31, 2026. Non-compliance with algo order tagging will attract penalties ranging from Rs 20,000 to Rs 1,00,000 per day based on the number of instances.

Key Points

  • Revised 14th digit identifier system replaces old classification for order types
  • Digits 1, 2, and 4 (Algo Trading, Algo using SOR, Inter-Exchange Algo) are classified as algo orders
  • Comprehensive mapping provided for different user types (ETI, TWS, API, Dealer) and segments
  • Vendor Code 99 is applicable for the 14th digit identifier
  • Previous notices 20250924-54 and 20250925-4 referenced for context on dealer terminal registration enhancement

Regulatory Changes

Old vs Revised 14th Digit Classification

Old System:

  • 0: No Prog Trading
  • 1: Algo Trading
  • 2: DMA
  • 3: DMA Algo
  • 4: SOR
  • 5: Hand-Held Device
  • 6: SOR with DMA
  • 7: SOR DMA with Algo
  • 8: Batch

Revised System:

  • 0: Non Algo Trading
  • 1: Algo Trading
  • 2: Algo using SOR
  • 3: Non Algo SOR
  • 4: Inter Exchange Algo
  • 5: RMS Square Off
  • 6: AMO
  • 7: Basket
  • 8: (Not specified in content)

Algo Order Definition

14th digit identifiers 1, 2, and 4 are classified as algo orders.

User Type Mapping Table

ETI (User Type 201 onwards):

  • Segments: EQ, EQD, CDX, BCX, EGR
  • Application: IBT
  • Algo/Non Algo: Non Algo
  • Pincode: 111111
  • TWS/Branch: 1111
  • User ID: 111
  • Applicable 14th digits: 0, 3, 6, 7, 8

TWS (User Type 1-199):

  • Application: STWT (Non Algo) and DMA (Non Algo)
  • Pincode: 555555 / 222222
  • TWS/Branch: 5555 / 2222
  • User ID: 555 / 222
  • 14th digits: 0, 3, 6, 7, 8

DMA CLIENT:

  • Application: DMA (Algo)
  • Pincode: 222222
  • TWS/Branch: 2222
  • User ID: 222
  • 14th digits: 1, 2, 4

DIRECT API:

  • Application: DIRECT (Algo)
  • Pincode: 444444
  • TWS/Branch: 4444
  • User ID: 444
  • 14th digits: 1, 2, 4

DEALER:

  • Application: DEALER (Non Algo / Algo / Non Algo)
  • Pincode: Based on actual location
  • TWS/Branch: Based on actual branch
  • User ID: Based on actual user
  • 14th digits: 0, 3, 5, 6, 7, 8 / 1, 2, 4 / 0, 7, 8

Compliance Requirements

For Trading Members:

  1. Update Location IDs: Register dealers with appropriate 14th digit identifier based on order type
  2. Deadline: Complete all updates by January 31, 2026
  3. Proper Classification: Ensure dealers are registered with correct 14th digit to avoid non-compliance related to algo orders
  4. Reference Circular: Review BSE Circular 20251010-4 dated October 10, 2025 regarding penalty rationalization

Penalty Structure for Non-Compliance:

As per Circular 20251010-4 on non-tagging of unique identifiers for algo orders:

  • First instance: Rs 20,000 per day
  • After 3 instances: Rs 50,000 per day
  • After 10 instances: Rs 1,00,000 per day (for incremental instances)

Important Dates

  • Notice Date: December 23, 2025 (Notice No. 20251223-22)
  • Compliance Deadline: January 31, 2026 (deadline for updating 14th digit identifiers)
  • Reference Notices:
    • September 24, 2025 (Notice 20250924-54) - Enhancement in dealer terminal registration
    • September 25, 2025 (Notice 20250925-4) - Enhancement in dealer terminal registration
    • October 10, 2025 (Circular 20251010-4) - Penalty rationalization and standardization

Impact Assessment

Operational Impact:

  • High: All Trading Members must review and update their Location ID registration systems
  • Requires mapping of all dealer terminals to new 14th digit classification
  • System changes needed to ensure proper tagging of algo vs non-algo orders
  • Affects multiple user types: ETI, TWS, API users, and dealers across all segments (EQ, EQD, CDX, BCX, EGR)

Financial Impact:

  • Escalating penalty structure creates significant financial risk for non-compliance
  • Maximum penalty of Rs 1,00,000 per day after 10 instances of non-compliance
  • Creates strong incentive for timely compliance by January 31, 2026

Market Impact:

  • Improved transparency in distinguishing algo and non-algo trading activity
  • Better regulatory oversight of algorithmic trading practices
  • Standardization of order identification across trading platforms

Technical Implementation:

  • Trading Members need to update dealer terminal registration processes
  • Vendor Code 99 applicable for 14th digit identifier implementation
  • May require coordination with technology vendors and internal IT systems

Contact: Trading Members should contact BSE Helpdesk for clarifications

Issued by: Kaushal Mehta (VP - Trading Operations) and Sanjay Pardiwala (DVP - Trading Operations)

Impact Justification

Mandatory system update affecting all trading members with strict deadline and escalating penalties for non-compliance (Rs 20,000 to Rs 1,00,000 per day)