"Is Algo Trading legal in India?" This is the most common question we get. The short answer is Yes, but with caveats.

SEBI (Securities and Exchange Board of India) has strictly categorized algo trading into two buckets: "Proprietary/Institutional" and "Retail/API". Understanding where you fall is crucial to staying compliant.

The Open API Era

Since 2015, brokers like Zerodha, Upstox, and Angel One have offered "Open APIs". These allow any retail user to programmatically place orders for their personal account.

Allowed:

• Writing a Python script to trade your own money.
• Buying software (Strategy) to help you make decisions.
• Using API bridges (like Amibroker/TradingView bridges) for automation, provided you are aware of the risks.

The Red Lines

Not Allowed (Without License):

• Selling Strategies with Guaranteed Returns: This is fraud.
• Managing Other People's Money (PMS): You cannot take money from friends/family and trade it via your algo without a PMS/RIA license.
• Unregulated "Tips": Automating the execution of Telegram tips from unregistered advisors.

The Future: Exchange Approval

There is an ongoing regulatory push to have every strategy "Exchange Approved". Currently, this applies mainly to brokers. However, retail traders using APIs are technically responsible for their own orders.

The recent Static IP mandate (discussed in our previous post) is a step towards auditing who exactly is controlling the algorithm.

Disclaimer

We are software developers, not lawyers. Regulations change rapidly. At AlgoDevStudio, we build the technology tools for you to execute your strategies efficiently. Compliance with local laws is the user's responsibility.