INDIA Law and Practice Contributed by: Shilpa Mankar Ahluwalia, Purva Anand and Ansh Jain, Shardul Amarchand Mangaldas & Co
7.4 Regulation of Programmers and Programming
for algorithms/tagging of algorithms and the testing requirements for software and algorithms. SEBI has recently issued a circular on Safer Partici - pation of Retail Investors in Algorithmic Trading (the “Retail Algo Circular”), providing clear guidelines on application-based trading, recognising it as a legiti - mate practice and setting guardrails around actions taken by stock brokers. The Retail Algo Circular came into effect on 1 August 2025. Under the Retail Algo Circular, an algorithmic trading strategy needs to be registered with the stock exchanges if the trading fre - quency is above the prescribed threshold. Algo pro - viders need to register white box solutions with the stock exchanges, and need to obtain a research ana - lyst licence from SEBI for offering black box solutions. These obligations are targeted at stock exchanges (except for commodity derivatives exchanges) in the country. The recent Retail Algo Circular also places obligations on stock brokers. Recent SEBI trends have been towards relaxing the OTR and orders per second (OPS) limits. SEBI also released a notifica - tion banning mis-selling of algorithmic strategies by making references to past performance or expected returns. These circulars cumulatively constitute the key regula - tory framework governing high-frequency and algo - rithmic trading. The Guidelines for Market Makers require market mak - ers to register with the stock exchanges per the rel - evant requirements notified by the stock exchanges. Generally, any member of a stock exchange is eligible to act as a market maker provided the criteria laid down by the exchange are met. 7.3 Regulatory Distinction Between Funds and Dealers Currently, the regulations do not distinguish between funds and dealers in the algorithmic trading space. 7.2 Requirement To Be Licensed or Registered as a Market Maker When Functioning in a Principal Capacity
The regulatory framework governing trading algo - rithms and other electronic trading rules lays down the following obligations on programmers: • that all algorithmic orders be tagged with a unique identifier provided by the stock exchange in order to establish an audit trail; and • the testing procedures which are to be followed by market participants before deployment of software and algorithms. Entities undertaking insurance business in India are required to be registered as an insurer or an insurance intermediary with IRDAI. The underwriting processes to be undertaken by insurers and insurance inter - mediaries are specified by IRDAI and include mak - ing appropriate disclosures on costs, expenses and charges payable on insurance policies, rates, terms and conditions of the policy, and audit and reporting mechanisms. 8.2 Treatment of Different Types of Insurance Different kinds of insurance business are subject to different regulatory frameworks. Broadly speaking, insurance business may be categorised into two main categories: life insurance and general insurance. Gen - eral insurance further includes sub-types such as fire insurance, marine insurance and vehicle insurance. 8. Insurtech 8.1 Underwriting Processes
9. Regtech 9.1 Regulation of Regtech Providers
Most regtech providers in India are centred around providing KYC and related onboarding services. There is also a recent boost in regtech solutions focusing on end-to-end automation of securities and labour compliances. There is no direct regulation governing regtech provid - ers in India. Certain functionalities of regtechs may, however, be subject to regulatory oversight. For exam -
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