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alphaadvisory
MUMBAI (Commodity Online): India's commodity
market regulator, Forward Markets Commission (FMC) has come out with a
set of uniform regulations on Friday with a view to curb excessive use
of alogrithmic trading in futures markets .
The Commission has said that the orders of clients are routed through member server only and client orders are not placed directly to the Exchange System. The exchanges shall not approve algorithms that may not be conducive to efficient price discovery or fair play.
The exchange shall also subject the systems of the member to initial conformance tests and ensure that the checks mentioned in the guidelines are in place. Immediate Or Cancel (IOC) orders shall not be allowed to be placed using algo trading.
The algos which will 'take liquidity' away from the market shall not be approved. While approving algo strategies, Exchanges shall record the reason as to why these are allowed and how it will induct more liquidity in the contract/system.
Exchanges will also make half-yearly review of effect of the approved strategies on liquidity and would discontinue Idisapprove any strategy which fails to induct liquidity.
The Commission has said that the orders of clients are routed through member server only and client orders are not placed directly to the Exchange System. The exchanges shall not approve algorithms that may not be conducive to efficient price discovery or fair play.
The exchange shall also subject the systems of the member to initial conformance tests and ensure that the checks mentioned in the guidelines are in place. Immediate Or Cancel (IOC) orders shall not be allowed to be placed using algo trading.
The algos which will 'take liquidity' away from the market shall not be approved. While approving algo strategies, Exchanges shall record the reason as to why these are allowed and how it will induct more liquidity in the contract/system.
Exchanges will also make half-yearly review of effect of the approved strategies on liquidity and would discontinue Idisapprove any strategy which fails to induct liquidity.
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