The authority also proposed setting up “dummy filters” for securities that have no price ranges but attract algorithmic trading interest.
Algorithmic trading, where investors use automated strategies through computer programs, has become popular in recent years due to increasing interest from retail investors due to the faster execution of the process and lower costs.
The International Financial Services Centers Authority (IFSCA) has proposed that a market participant should only engage in algorithmic trading with the prior approval of an exchange.
Other proposals included asking exchanges to audit the algorithms of existing or prospective participants.
It is “to ensure that risk management controls… are in place and that the market participant’s algorithmic trading system enables orderly trading and market integrity,” IFSCA said.
The authority also proposed setting up “dummy filters” for securities that have no price ranges but attract algorithmic trading interest.
The exchange will have the flexibility to impose ‘financial disincentives’, such as fines, in cases where the number of orders placed far exceeds the number of trades executed.
That would “provide sufficient deterrence against order flooding or any other form of market manipulation,” IFSCA added.
Published on January 21, 2026
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