SEBI Announces Settlement Scheme for Brokers in Algo Trading Cases

The Securities and Exchange Board of India (SEBI) has launched a settlement scheme for stock brokers associated with certain algorithmic trading platforms. The scheme was announced on June 9, 2025.

Scheme Details 

The settlement window will be open from June 16 to September 16, 2025. It applies to stock brokers against whom proceedings are already underway and are pending before SEBI’s Adjudicating Officer, the Securities Appellate Tribunal (SAT), or courts.

This scheme is being rolled out under Section 15JB of the SEBI Act, 1992, and Regulation 26 of the SEBI (Settlement Proceedings) Regulations, 2018.

Reason for Action

As per the reports, in 2023, SEBI had issued show-cause notices to over 110 brokers.. These platforms, including Tradetron, were found offering algorithm-driven strategies that connected directly to broker systems. SEBI had earlier flagged this model and advised against such practices.

Read more: India’s First Major Stock Market Spoofing Case!

Objective and Conditions

The new scheme is named ‘Settlement Scheme for Association with Certain Algo Platforms, 2025’. It provides brokers a time-bound option to settle cases without continuing through the full adjudication process. SEBI has stated that if a broker does not opt for the scheme, proceedings will continue as per existing legal provisions.

FAQs detailing eligibility and procedural requirements will be published on SEBI’s official website on June 16, 2025.

Expected Settlement Amount

While SEBI has not formally disclosed settlement amounts, the violations are considered industry-wide rather than case-specific. Reports suggest the amount could be around ₹1 lakh per case, but this is yet to be confirmed officially.

Conclusion

The scheme provides a 90-day window for brokers to resolve ongoing matters related to their involvement with certain algo trading platforms. Those not opting in will continue to be subject to regulatory proceedings.

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