MUMBAI: As many as 111 brokers of the 120 who were issued show-cause notices for alleged violation of algo trading rules have chosen to go for settlement with the markets regulator Sebi.
Sebi said the brokers involved in the alleged violations who chose to settle now include industry leaders like Zerodha, Upstoxx, HDFC Securities, ICICI Securities, Angel One, JM Financial, Nuvama Wealth, Choice Equity Broking, Prabhuldas Leeladher, 5Paisa Capital, Anand Rathi, Geojit, Nirmal Bang, Paytm Money, and Motilal Oswal among others.
These entities paid Rs 1 lakh each to settle the matter, said an order passed by Sebi on Wednesday.
The scheme offered brokers facing adjudication proceedings pending before the adjudicating officers, the Securities Appellate Tribunal, or various courts a resolution of the alleged violations in a time-bound and streamlined manner, in accordance with the provisions of the settlement regulations.
Sebi said as many as 111 entities have utilized the settlement scheme for association with certain algo platforms 2025, designed to resolve pending proceedings against stock brokers linked with unauthorized algorithmic trading platforms.
Following high interest, the regulator extended the scheme, which began on June 16, 2025 allowing brokers to settle cases by paying a penalty, rather than facing long-term litigation. The settlement scheme was first extended to October 16, 2025 following which the majority chose to go for settlement with the regulator.
In Sebi parlance, opting to settle an alleged violation does not mean the parties have admitted to their mistake.
The Sebi proceedings against these stock brokers began in 2025 for allegedly violating regulations by associating with unregulated algorithmic trading platforms like Tradetron that promised guaranteed returns, violating a September 2022 Sebi circular. These brokers faced scrutiny for integrating their APIs with these platforms, allowing clients to engage in risky algo strategies.
Brokers also allowed their clients to use API-linked, third-party algo trading platforms that advertised assured or consistent profits.
This crackdown aimed at curbing marketing of risky, unregulated algorithmic strategies to retail investors, forcing stricter compliance over automated trading systems, with a comprehensive new framework made mandatory by April 1, 2026.
Last September, Sebi extended the settlement window till October 16, 2025 after "observing that a number of entities have shown interest in availing the scheme. Considering the interest of entities in availing the scheme, the competent authority has extended the period of the scheme till October 16, 2025".