'Tighter Trading Rules to Create Better Trust'
BENGALURU: Proposals by Securities and Exchange Board of India (SEBI) to tighten grip on algorithmic trading could actually boost mood and confidence in markets and it’s not going to hurt the country's second biggest bourse, the head of Indian exchange operator BSE Ltd told Reuters.
SEBI unveiled a discussion paper last week to discuss the various limits on algo traders, including reduced speed limits at which trades are executed, due to concerns about fair access to markets.
"Well thought out and well-designed forward looking regulations create better trust," Ashish Kumar Chauhan, Chief Executive, BSE, said in an interview with Reuters.
"We are not concerned about undue impact on our business," he said, adding that he expects the new rules could actually benefit the traders, rather than diminish trading volumes.
Algorithmic trading has become a huge source of monetary gains for both the BSE and the NSE Ltd. There is a fair chance that the new rules could come into existence as both exchanges look to go public. The bankers estimate that the BSE which is looking to go public could be valued at about $750 million to $1 billion.
The main chunk of the BSE's order flow is currently being generated by algo trading, and algo traders have warned that the SEBI proposals are too restrictive and archaic and could force them to trade in overseas markets.
Indian market scene has changed for better in the last couple of months and the markets have rallied on expectations of a recovery in earnings as the government has made progress in pushing through some reforms, including recently passed a landmark goods and services tax.
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