Saturday, December 11, 2021

SEBI mulls regulating and banning algo based trading

Starting 2022, services you availed for buying and selling of equity may stop.

SEBI is rightly mulling to regulate and stop #algotrading.

What is algo trading?

In simple terms, buy or sell and/or both certain assumption based formulas (simple or complex) and standardizing the same to offer investors and brokerages #api to avail these services.

Why SEBI is regulating and stopping?

A_ there were many such offers going on  and many of them made such products and even offered / showcased sure shot returns strategy where as most of them have inbuilt risks and very little market cycle testing.

B_ every strategy is based on certain assumptions which is based in past data and the analysis of the same is done by humans which brings subjectivity basis experience, education and understanding plus market cycle.

SEBI rightly understands that one size does not fit all and the same strategy based on assumptions may not fit all.

Plus, every analysts chooses to opt for certain investing psychology, which again may not fit all.

Hence In the interest of investors, #sebi is tightly mulling to stop, ban and regulate.

My take -
algo trading is not bad, infact blessing in disguise in current #fintech world, but needs regulation and many #disclaimers and declarations for one to understand suitability and then choose.

Would be interesting to know your view and open to challenge to my view.

Kirtan A Shah
Madhvendra .
Nikhil Gopalakrishnan   
Vipul Prasad   
CA Neha Jain    
CA. Anand Lunkar     
NIKUNJ MITTAL      

#wealthcreation #investingforbeginners #financialplanning #financialplanner 

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