The Securities and Exchange Board of India (SEBI) has issued show cause notices to over 120 stockbrokers for their ongoing association with the algorithmic trading platform Tradetron, according to a report by NDTV Profit citing sources familiar with the matter. Some of the well-known brokerages that are receiving these notices include Bajaj Financial Securities, Motilal Oswal Financial Services, Zerodha and 5Paisa Capital.
Such a move is part of SEBI's investigation into suspected regulatory breaches by Tradetron and other algorithmic trading platforms. Tradetron, which allows users to automate their trading techniques, was claimed to have presented algo trading strategies on its website that promised guaranteed profits, a practice prohibited by SEBI's circular effective 2022.
The report highlighted that a total of 122 brokers are in violation of these regulations, as they continued to maintain their API integration with Tradetron. Many of these brokerage firms continued to work with Tradetron even after submitting an assurance to SEBI indicating that they had ended their relationship with the platform.
The list of stockbrokers receiving SEBI notices includes Anand Rathi Share & Stock Brokers, Geojit Financial Services, Aditya Birla Money, Angel One, ICICI Securities, Arihant Capital Markets, Ashika Stock Broking, IIFL Securities, Bonanza Portfolio, Choice Equity Broking, Hem Securities, HDFC Securities, and several others.
Additionally, Kedia Capital Services, Paytm Money, Kotak Securities, JM Financial Services, Profitmart Securities, Master Capital Services, Phillip Capital (India), Samco Securities, Tradejini Financial Services, SMC Global Securities, Swastika Investmart, Sharekhan, and Prabhudas Lilladher have also received SEBI show cause notices.
Also last week, SEBI introduced new regulations to tighten the norms on Futures and Options (F&O) trading, aiming to protect retail investors and ensure market stability. These measures address the concern that derivatives have often been labeled as a “new lottery” for many retail traders. Key changes include reducing expiries to a weekly basis, increasing the minimum contract size, implementing upfront collection of premiums, raising margin requirements, and removing calendar spread benefits.
