INSUBCONTINENT EXCLUSIVE:
NEW DELHI: Leading exchanges BSE and NSE have said that charges for high algo order to trade ratio (OTR) will be levied in the equity
segment from June 29.
The bourses currently levy charges for high algo OTR in equity derivatives and currency derivatives
segments.
Algorithmic or algo trading refers to high-frequency and automated execution of trades on the stock exchanges through
pre-programmed software platforms installed on servers.
In two separate but similarly worded communications dated June 22, the exchanges
said, trading "members are hereby informed that along with equity derivatives and currency derivatives segment, charges for high order to
trade ratio shall also be levied in equity segment with effect from June 29, 2018".
The charges will be computed at member level on a daily
basis and collected on a monthly basis, after reckoning all algo orders and algo trades of the member, BSE said in a notice.
For daily algo
OTR of less than 50, there will be no charge
In case it is from 50 to less than 250, the amount will be 2 paise per algo order.
The daily algo OTR from 250 to less than 500 will attract
10 paise per order, while a similar amount will be charged if it is 500 or more than that.
"In case the order to trade ratio is 500 or more
than 500 during a trading day, the concerned trading member shall not be permitted to place any orders for the first 15 minutes on the next
trading day as a cooling off action and shall be able to place orders only after 15 minutes of the normal market open in equity segment,"
BSE said.
On several occasions in the past, the Securities and Exchange Board of India (Sebi) has advised stock exchanges to put in place
effective economic disincentives for high daily OTR of algo orders placed by members in order to ensure orderly trading in the market.
