Description

SEBI issued a settlement order for 111 stock brokers who availed the Settlement Scheme on Association with Certain Algo Platforms, 2025, resolving adjudication proceedings related to their API integration with algo platforms displaying guaranteed returns.

Summary

SEBI issued a settlement order under the Settlement Scheme for Association with Certain Algo Platforms, 2025, resolving adjudication proceedings against stock brokers whose APIs were integrated with algo platforms that advertised guaranteed returns or consistent profits. A total of 111 out of 122 brokers charged opted into the scheme and paid the specified settlement amounts, bringing closure to the pending enforcement proceedings.

Key Points

  • SEBI found 122 stock brokers whose APIs were integrated with algo platforms displaying guaranteed/consistent profit strategies, violating SEBI Circular SEBI/HO/MIRSD/DOP/P/CIR/2022/117 dated September 02, 2022
  • Violations were in respect of Clause 4.2 of the SEBI Circular and Clause A(2) & A(5) of Schedule II (Code of Conduct) read with Regulation 9 of SEBI (Stock Brokers) Regulations, 1992
  • SEBI introduced a Settlement Scheme under Section 15JB of SEBI Act, 1992 read with Regulation 26 of SEBI (Settlement Proceedings) Regulations, 2018
  • The scheme was open from June 16, 2025 to September 16, 2025, and extended to October 16, 2025
  • 111 entities availed the scheme and remitted the specified settlement amounts

Regulatory Changes

No new regulatory changes were introduced. The settlement order is issued under the existing Settlement Regulations framework. Regulation 26 of the Settlement Regulations allows SEBI to specify a settlement scheme for any class of persons involved in similar specified defaults, and a settlement order issued under such a scheme is deemed a settlement order under the regulations.

Compliance Requirements

  • Stock brokers must not integrate their APIs with algo platforms that display guaranteed returns, assured profits, or consistent profit claims
  • Brokers must comply with Clause 4.2 of SEBI Circular SEBI/HO/MIRSD/DOP/P/CIR/2022/117 (September 02, 2022) regarding algo platform associations
  • Brokers must adhere to the Code of Conduct under Clause A(2) & A(5) of Schedule II read with Regulation 9 of SEBI (Stock Brokers) Regulations, 1992
  • Entities that availed the scheme must have paid the applicable settlement amount through SEBI’s online platform

Important Dates

  • September 02, 2022: Original SEBI Circular on algo platform association issued
  • June 15, 2025: SEBI issued Public Notice for the Settlement Scheme
  • June 16, 2025: Settlement Scheme opened
  • September 16, 2025: Original scheme closing date; extended via public notice
  • October 16, 2025: Extended scheme closing date
  • March 2026: Settlement order issued by SEBI

Impact Assessment

This settlement order has significant implications for the algo trading ecosystem in India. The action against 122 brokers signals SEBI’s strong stance against associations with platforms making unsubstantiated profit claims. The settlement scheme approach—rather than individual adjudication—demonstrates SEBI’s intent to efficiently resolve large-scale, common-violation cases. Brokers remaining outside the scheme (11 of the 122) continue to face adjudication proceedings. The order reinforces that API integrations with third-party algo platforms are subject to regulatory scrutiny, and brokers must ensure such platforms do not make misleading return guarantees.

Impact Justification

Affects 111 stock brokers and resolves a major enforcement action involving 122 brokers for illegal association with algo platforms promising guaranteed returns, with broad implications for algo trading compliance.