NSE Norms for Safer Participation of Algo Traders: 16 Takeaways

The implementation standards intended to safeguard the interests of retail investors have been dictated by the National Stock Exchange (NSE) of India on Monday, May 5, 2025.

The norms issued by the exchange with respect to safer participation categorically outlines the directives for stock brokers facilitating algo trading, algos generated by retail clients and other platforms providing algorithmic trading. 

Let us take a look at 16 major takeaways from NSE’s latest circular that is intended to instigate safer participation of algo traders:

Limit on Algo Orders

1. The stock exchange has initially set the threshold order per second (TOPS) at 10 orders which can be modified at a later. Subsequently, all orders exceeding the TOPS limit will be rejected, while the assessment of the TOPS limits will continue to be carried out by the brokers.
2. With a limit of 10 orders per second in place, clients are thereby advised to register algorithms if they wish to place orders at speeds exceeding the prescribed limit. 
3. Brokers providing algo trading on their platform can fix client-wise TOPS limits, but it should remain well within the exchange directives. 
4. In order to register, a broker acting on the behalf of the client can receive necessary information from the trader and pass on the same to the exchange. A fresh registration ID will be communicated to clients via broker after successful registration of algorithms. 

API Norms for Clients

1. Brokers can assign multiple API keys to clients to run different algorithms, while the clients are advised to provide one primary & one secondary static IP for effective connectivity. 
2. Subsequently, all orders exceeding the TOPS limit will be rejected, while the assessment of the TOPS limits will continue to be carried out by the brokers.
3. Static IP is compulsory for all client-generated algorithms. The static IP could be of the client or vendor in case of algos generated via empanelled algo providers, whereas static IP of client or broker is required for broker-generated algos. 
4. Clients are entitled to update their respective static IP, once a week. A static IP can be shared among family members following a written request to broker as a static IP can only be mapped to one client at a time.  
5. All API sessions should mandatorily be logged out daily before the commencement of the next trading day.
6. API connectivity should be utilised for automated trading or software-based automated trades in the secondary markets, provided such API connectivity is equipped with RMS checks by stockbrokers. 

Norms for Broker-Generated Algos & Algo Providers

1. Stockbrokers have the liberty to create & offer algorithms to the clients after registration and obtaining exchange-specific algorithmic ID​.
2. The brokers should timely communicate all relevant information with the clients and must take necessary approvals from the exchange if the entity is modifying the logic of broker-generated algorithms by reporting the same to the exchanges. 
3. It has further directed that all algo providers should be empanelled and registered with exchanges wherever such algorithms are intended to be traded.
4. The empanelled algo providers must obtain a unique ID for all their algos after successful registration with the stock exchanges. 
5. Stockbrokers can enter into commercial or technical agreements with algo providers by integrating their trading systems and informing the exchanges about the status of agreements. 
6. The exchange has also directed the stockbrokers that all retail algorithms should be hosted on brokers’ cloud servers, including those provided by empanelled Algo providers. 

About Author