INDIA Law and Practice Contributed by: Shilpa Mankar Ahluwalia, Himanshu Malhotra and Purva Anand, Shardul Amarchand Mangaldas & Co
6.4 Listing Standards Listing standards and disclosure requirements are governed by SEBI and registered stock exchanges. SEBI regulations on listing are fairly comprehensive and have separate requirements for public issues and private placements. In addition, the regulations also prescribe continu - ous disclosure requirements in connection with listed securities, based on materiality of events and their impact on the performance of the listed securities. 6.5 Order Handling Rules Placement of orders and settlement of funds for trades completed on the stock exchange are governed by applicable procedural rules which stipulate settlement cycle, timelines for place - ment of orders and completion of trades, etc. Given that listed securities are mandated to be in dematerialised form, transactions are under - taken through dematerialised accounts through registered brokers or agents. 6.6 Rise of Peer-to-Peer Trading Platforms See 2.1 Predominant Business Models . As far as digital lending is concerned, currently there are 26 P2P lending platforms authorised by RBI in India. P2P lending platforms have simplified delivery of credit to interested borrowers from non-traditional lenders such as small digital lending platforms and lending start-ups. 6.7 Rules of Payment for Order Flow SEBI prescribes procedural rules for process - ing payments for trades in listed securities. For example, in 2018, SEBI introduced the electron - ic book process (EBP) for private placement of listed debt securities. Under the EBP, subscrip - tion monies in respect of debt securities must be routed through an escrow account or the bank account of the Clearing Corporation of India
Limited and should be credited to the issuer’s account upon allotment of the debt securities. 6.8 Market Integrity Principles Trading in securities in India is regulated and gov - erned primarily by SEBI through policy moves for market surveillance and risk mitigation measures at the stock exchanges. The market surveillance systems of SEBI also oversee whether appropri - ate systems and safeguards have been adopted by stock exchanges to check market move - ments and flag any issues (for example, timely reviews of the margining system). 7. High-Frequency and Algorithmic Trading 7.1 Creation and Usage Regulations SEBI, by way of a circular dated 3 April 2008, introduced the concept of Direct Market Access (DMA) and provided a legal framework for regu - lating such access to the DMA framework. SEBI permitted institutional investors to use DMA through SEBI-registered investment man - agers. In respect of algorithmic trading, SEBI issued the Broad Guidelines on Algorithmic Trading and subsequently issued additional guidelines pertaining to the same. Additionally, SEBI issued the Measures to Strengthen Algo - rithmic Trading and Co-location/Proximity Host - ing Framework, which discussed the framework around managed co-locations, measurement of latency for co-location and proximity hosting and the free-of-charge tick-by-tick data feed (TBT Feed), order-to-trade ratio (OTR) penal - ties, unique identifiers for algorithms/tagging of algorithms and the testing requirements for soft - ware and algorithms. SEBI has recently issued a circular on Safer Participation of Retail Inves - tors in Algorithmic Trading (Retail Algo Circular)
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