๐๐ ๐๐๐ ๐๐ฌ๐ฌ๐ฎ๐๐ฌ ๐๐ฎ๐ข๐๐๐ฅ๐ข๐ง๐๐ฌ ๐๐จ๐ซ ๐๐ฅ๐ ๐จ๐ซ๐ข๐ญ๐ก๐ฆ๐ข๐ ๐๐ซ๐๐๐ข๐ง๐ ๐จ๐ง ๐ญ๐ก๐ ๐๐ญ๐จ๐๐ค ๐๐ฑ๐๐ก๐๐ง๐ ๐๐ฌ
The International Financial Services Centres Authority (IFSCA) has issued a Circular dated October 16, 2026, laying down a comprehensive framework for algorithmic trading on the stock exchanges in the IFSC. The Circular comes into force with immediate effect.
Key developments:
- Prior approval: No market participant may deploy, offer or facilitate algorithmic trading without the prior express approval of the stock exchange, which is to subject the system to initial conformance testing.
- Risk controls: Order-level price and quantity checks at the exchange, and minimum controls at the participant level, including price, quantity and order value checks and automated execution safeguards.
- Kill switch: Every market participant undertaking algorithmic trading must implement a kill switch capable of immediately halting all outgoing algorithmic trading orders and cancelling live orders, triggered manually by designated personnel or automatically upon breach of prescribed risk thresholds. It must be tested periodically, with records of testing made available to the stock exchange on request.
- Use of AI: Where AI, machine learning or other advanced computational methods are used in connection with algorithmic trading, the market participant remains responsible for adequately explaining the impact of AI on the decision-making of the trading algorithm.
- System audits: Annual system audit of algorithmic trading systems, with prescribed auditor eligibility, auditor rotation, and time-bound reporting and closure of audit findings.
- Surveillance: Stock exchanges must ensure effective monitoring of all orders and trades resulting from algorithmic trading systems, supported by unique order identifiers for a verifiable audit trail.
The Circular also supersedes earlier SEBI circulars and guidelines on algorithmic trading on stock exchanges that were applicable in the IFSC. Market participants and stock exchanges in the IFSC are advised to refer to the attached Circular for the detailed provisions. Readers are welcome to share their views with Regstreet Law Advisors on info@regstreetlaw.com.