The Securities and Exchange Board of India (SEBI) Introduces New Regulations for Algo Trading to Enhance Investor Protection and Market Transparency
SEBI, vide circular no. SEBI/HO/MIRSD/MIRSD-Pod/P/CIR/2025/0000013 dated February 4, 2025, has introduced additional measures to strengthen Algorithmic Trading which is mainly to safeguard Retail Investors from the evils of Algo Trading but also to facilitate to them, access to benefits of Algo Trading through registered brokers and Stock Exchanges.
Key Takeaways:
- The implementation standards shall be formulated by the Broker’s Industry Standards Forum by 1st April 2025, with the provisions becoming effective from 1st August 2025.
- SEBI is introducing a comprehensive framework to enable safer participation of retail investors in algorithmic trading with proper risk management measures and safeguards in place.
- Brokers will serve as principals, while algo providers will act as their agents. Brokers must ensure proper screening, with all algo orders requiring a unique identifier from stock exchanges for tracking and audit purposes.
- While not directly regulated by SEBI, algo providers must be empanelled with stock exchanges, meet set criteria, and maintain transparency in fee structures.
The Insolvency and Bankruptcy Board of India (IBBI) amends regulations streamlining Corporate Insolvency Resolution Process
The Insolvency and Bankruptcy Board of India (IBBI), vide Notification No. IBBI/2024-25/GN/REG122 dated February 3, 2025, notified the IBBI (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2025 to amend the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.
Key Takeaways:
- Regulation 4E has been to the Principal Regulations wherein the Resolution Professional (“RP”), after obtaining approval of not less than 66% of the votes of the Committee of Creditors shall handover possession of plots, apartments, or buildings where the allottee has requested for the same and has performed its part of the agreement.
- Introduction of Regulation 16C enables Appointment of Facilitators when a creditor class excess 1,000 members, provided at least 100 creditors from a sub-class request such representation. With a maximum of 5 facilitators permitted and fees set at 20% of authorized representative costs, this change enhances representation while maintaining cost efficiency in complex insolvency proceedings.
- Amendment of Regulation 18 where a corporate debtor has any real estate project, the Committee of Creditors can now invite land authorities to meetings for inputs on real estate projects, regulatory, and land development matters, but without voting rights.
- Introduction of Regulation 30C mandating a report to be prepared by the RPs on real estate development rights, approvals, and permissions for real estate projects within 60 days of commencement of CIRP of the corporate debtor.
The Supreme Court held that an oral undertaking falls within the scope of Arbitration Clause.
The Supreme Court in its judgment dated February 10, 2025, in AC Choksi Share Broker Private Limited v. Jatin Pratap Desai & Anr., held that an oral contract undertaking joint and several liability falls within the scope of an arbitration clause.
Key Takeaways:
- The case involved a BSE-registered stockbroker invoking arbitration against a husband and wife for the wife’s debit balance in her stock trading account. The Arbitral Tribunal ruled that both were jointly and severally liable, as the husband was actively involved in transactions, but The High Court’s Division Bench set aside the ruling against the husband.
- The Supreme Court Bench of Justices PS Narasimha and Sandeep Mehta reinstated the arbitral award, holding that an oral contract falls within the arbitration clause, and it is clear that the 37 award is not liable to be set aside on the grounds of perversity or patent illegality.
- This verdict clarifies that oral agreements may establish financial liability in stock trading disputes.
- The ruling was based on Byelaw 248(a) of the BSE Byelaws, 1957, along with Section 34 and Section 37 of the Arbitration and Conciliation Act, 1996, reinforcing the limited scope of judicial intervention in arbitral awards.
Ministry of Information & Broadcasting issues advisory to OTT platforms over obscene content
The Ministry of I&B has issued an advisory on February 19, 2025, to OTT platforms and their Self-Regulatory Bodies regarding adherence to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 and other applicable laws.
Key Takeaways:
- The advisory has been issued in response to concerns raised by Members of Parliament, statutory organizations, and public grievances, urging OTT Platforms and their self-regulation bodies to ensure compliance with content guidelines and curb vulgar or obscene content on streaming services.
- The advisory reinforces compliance with Part-III of the IT (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, which mandate content moderation, age-based classification, and responsible content curation.
- The advisory references key laws such as the Indecent Representation of Women Act, 1986, BNS 2023, POCSO Act, and IT Act, 2000, highlighting that publishing obscene or pornographic content is a punishable offense.
- The Ministry has urged industry self-regulatory bodies to take proactive measures to ensure OTT platforms adhere to the Code of Ethics and legal frameworks.
