With several amendments over the years, India provides a good opportunity for Algo traders due to a number of factors such as co-location facilities and sophisticated technology at both the major exchanges; a smart order routing system; and stock exchanges that are well-established and liquid.
Algo trades account for over 43% of India’s stock market turnover. In the US, where retail investors also engage in Algo trades, 90% of the turnover is from automated systems. The global average is 75%.
SEBI was among the first regulators to issue a discussion paper proposing strengthening of rules on Algo trading in August 2016.
With rules in place, Algo trades in India will rise to the global average, market participants said. There are a lot of startups in this space waiting to enter once rules are in place. This will be a big boost for Algo trading.