IFSCA circular · 16 Oct 2026
1 | P a g e CIRCULAR IFSCA/CMD-DMIIT/ALGO/2026-27/01 October 16, 2026 To, All the Stock Exchanges in the International Financial Services Centre (IFSC) All the Broker Dealers in the IFSC All the Remote Trading Participants (RTPs) through respective Stock Exchanges Dear Sir/ Madam, Subject: Guidelines for Algorithmic Tr…
[Image omitted. See the official document.]
IFSCA/CMD-DMIIT/ALGO/2026-27/01
October 16, 2026
To,
All the Stock Exchanges in the International Financial Services Centre (IFSC)
All the Broker Dealers in the IFSC
All the Remote Trading Participants (RTPs) through respective Stock Exchanges
Dear Sir/ Madam,
Subject: Guidelines for Algorithmic Trading on the Stock Exchanges
To promote the sound, orderly and transparent development of algorithmic trading across the Stock Exchanges in IFSC, the International Financial Services Centres Authority (IFSCA) hereby issues the following guidelines. These guidelines are intended to strengthen market integrity, mitigate systemic and operational risks, and ensure fair and equitable access to market infrastructure, while preserving the operational flexibility that competitive Stock Exchanges demand.
This Circular aims to establish a comprehensive regulatory framework governing algorithmic trading practices with the objective to broaden meaningful market participation, enhance liquidity and strengthen market resilience across the IFSC ecosystem.
In doing so, the Authority aims to balance technological advancement with prudent regulatory safeguards, thereby supporting the continued growth, stability and international competitiveness of the IFSC as a premier financial market jurisdiction.
a) "Algorithmic Trading" means trading in securities listed on a Stock Exchange where a computer algorithm or program or automated system, determines, with limited or no human intervention, one or more individual parameters of an order, including but not limited to:
Explanation:
For the purposes of this clause, the term "Algorithmic Trading" shall not include any system that is solely used to perform non-discretionary, mechanical functions, involving no independent determination or adjustment of trading parameters, including but not restricted to:
b) "Algorithmic Trading Order" means an order, including any subsequent modification or cancellation, that is initiated, generated or determined through Algorithmic Trading
c) "Algorithmic Trading System" means the entire suite of hardware, software, procedures processes used in the execution and risk management of Algorithmic Trading
d) "Dysfunctional Trading Algorithm" means any Trading Algorithm that malfunctions, behaves abnormally or operates in a manner not intended or authorized by the Market Participant, including any algorithm that creates a loop or a runaway execution or repetitive order generation or erroneous order placement or other unintended trading behaviour that may adversely affect market integrity
e) "Market Participants" means all Broker Dealers registered with the Authority and includes all RTPs onboarded by the Stock Exchanges in the IFSC
f) "Trading Algorithm" means a computer-based set of rules, instructions or logic used in Algorithmic Trading
The Stock Exchange shall put in place the necessary arrangements, procedures and system capabilities to effectively manage system load and ensure consistent, fair and equitable response times for all Market Participants.
The Stock Exchange shall synchronize its system clock with the atomic clock before the start of the market and shall ensure that such clock maintains:
The Stock Exchange may, wherever necessary, consider requisite changes in tick sizes to ensure effective operation of the price-time priority order matching system protocol or such other order matching system protocol as may be adopted by the Stock Exchange.
The Stock Exchange shall ensure that its systems possess the requisite resilience and scalability to handle peak order volumes and high-velocity data flows. The Stock Exchange shall, wherever necessary, upgrade its technological infrastructure to accommodate the latency, throughput and reliability requirements inherent to Algorithmic Trading.
No Market Participant shall deploy, offer or facilitate Algorithmic Trading unless it has obtained the prior express approval of the Stock Exchange in accordance with such conditions and procedures as may be specified by the Stock Exchange.
The Stock Exchange shall put in place measures, procedures, standards, formats and guidelines as may be necessary for evaluating, approving, monitoring, suspending or withdrawing approval of any Algorithmic Trading System, including Trading Algorithm, proposed to be deployed by a Market Participant.
The Stock Exchange shall subject the Algorithmic Trading System of a Market Participant to initial conformance testing to ascertain, inter alia, that the risk control checks mentioned below are duly implemented and that the system is capable of supporting orderly trading and safeguarding market integrity. The results of the test shall be communicated to the Market Participant.
For Market Participants already deploying, offering or undertaking Algorithmic Trading, as on the date of issuance of this Circular, the Stock Exchange shall ensure that such Algorithmic Trading Systems are subjected to initial conformance testing, if not already undertaken, within a period of three months from the date of issuance of this Circular.
The Stock Exchange shall, where necessary, seek re-conformance or fresh conformance testing of any modified Algorithmic Trading System to verify continued compliance with the requirements specified in this Circular.
The Stock Exchange shall require Market Participants to participate in the periodical testing of their Trading Algorithms, in isolation as well as a collective, in simulated market environments, to ascertain:
a) behavior and stability of the Trading Algorithm under conditions of extreme market volatility and stress
b) the impact of delayed or disrupted market data feeds on decision-making of the Trading Algorithm
c) the efficacy of kill-switch mechanisms and the logic governing automated liquidity withdrawal
d) any other behavior of the Trading Algorithm or Algorithmic Trading System relevant for orderly trading and market integrity.
The Stock Exchange shall utilize the insights gained from these simulations as a feedback loop and accordingly update its mechanisms for grant of permission for Algorithmic Trading, initial conformance tests, surveillance mechanisms and logic, etc.
Provided that in the case of such rejections or modifications, the Stock Exchange shall inform the Authority, along with detailed rationale.
Every Market Participant engaged in, proposing to engage in, or facilitating Algorithmic Trading shall establish and maintain adequate governance, oversight, risk management and operational control arrangements commensurate with the nature, scale, complexity and risk profile of its Algorithmic Trading activities.
Market Participants shall ensure that personnel involved in the design, development, procurement, deployment and oversight of Algorithmic Trading Systems possess an adequate understanding of the following:
