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SEBI has introduced a three-month settlement window for stock brokers involved in potential algorithmic trading violations. This applies to brokers who used third-party algo tools without approval or allowed client-side execution in breach of regulations. To qualify, brokers must admit default and pay penalties, with exclusions for those with prior SEBI penalties or ongoing cases. The move supports SEBI's ongoing efforts to regulate tech-driven trading and enforce stronger compliance standards. In a separate directive, SEBI has mandated that all legacy Venture Capital Funds (VCFs) transition to the Alternative Investment Fund (AIF) framework by mid-2025. A one-year grace period has been allowed for liquidation of expired schemes, after which no extensions will be granted. The AIF structure, introduced in 2012, offers enhanced oversight and transparency, and is now considered essential for managing India's evolving investment ecosystem.
The Securities and Exchange Board of India (SEBI) recently announced a special three month settlement window for stock brokers implicated in possible algorithmic trading infractions. The move targets brokers who may have used third-party algo tools without the requisite approvals or enabled client-side algorithmic execution in violation of established norms. Advertisement
To qualify, brokers must admit their default and agree to settle through monetary penalties and compliance commitments. Those with ongoing litigation or past SEBI penalties may not be eligible, ensuring the scheme only benefits those looking for clean, proactive closure.
This initiative follows SEBI's broader push to regulate algo-based execution tools offered by vendors without adequate oversight. With the rise of retail algo trading and tech-enabled brokerages, the regulator has emphasised the need for transparency, audit trails, and robust risk control.
In other developments SEBI has mandated all older venture capital funds (VCFs) to migrate to the Alternative Investment Fund (AIF) framework by mid 2025. The regulator has granted a one-year grace period for liquidation of the expired scheme, emphasising that no further extensions will be provided beyond the said deadline.
The AIF framework-introduced in 2012-was designed to replace the earlier VCF structure, offering a broader and more transparent oversight mechanism. SEBI has consistently maintained that the AIF model is better suited for India's current investment climate, particularly given the increasing volume of pooled investment vehicles and demand for regulatory accountability.
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