Hey folks! 
To create a more secure, transparent, and robust environment for everyone, SEBI and the stock exchanges have introduced a new regulatory framework, which will be fully effective from October 1, 2025.
These changes professionalize the algo trading ecosystem, and we’re here to guide you through the necessary steps. This notice outlines the key action items for our two main user groups: our technology partners (Algo Providers) and our valued clients (Traders).
Algo Providers
The new framework formalizes your role as an agent of the broker. To continue offering your services to retail investors through our platform, you must comply with the following mandates:
- Exchange Empanelment:
You are now required to be empaneled with the stock exchanges (NSE/BSE). This is a prerequisite for any partnership with us. The process involves an application and meeting specific eligibility criteria, including having directors with at least two years of experience in the securities market. - Registration for Every Algorithm:
Each algorithm or strategy you offer must be registered with the exchange through us. A unique Algo ID will be assigned to each approved strategy.
For Blackbox algos, no modification to the logic of a registered algo is permitted**. Any change necessitates applying for a completely new registration.
Please note: This Algo-ID once assigned, will have to be passed with every order. Orders that do not include the same, will be rejected from our end.
-
SEBI Research Analyst Registration for “Blackbox” Algos: If you offer “Blackbox” strategies (where the logic is not disclosed to the user), your firm must be registered with SEBI as a Research Analyst. This is a critical compliance requirement.
A note on this: If the strategy uses anything other than Time-Weighted Average Price (TWAP) and Volume-Weighted Average Price (VWAP), it would be deemed as a Blackbox Algo. Even if the strategy and inner workings are disclosed/open. -
Broker Due Diligence:
As part of our new responsibilities, we are required to conduct comprehensive due diligence before onboarding any empaneled vendor. A formal agreement would be in place, along with procedures of audit trail when necessary/asked by the exchanges/SEBI. -
Static IPs: One static IP can be used for all clients once empaneled and the algo is approved.
Steps ahead: We are in -process of building the needed infrastructure for the entire process that includes - Multi-user authentication flow, Submitting required documents (with samples), access to Mock sessions, etc. We’re in-touch with the exchanges for fixate on the framework and will keep you posted as these developments take shape.
Direct API Users
| Compliance Aspect | Scenario 1: At or Below 10 OPS | Scenario 2: Above 10 OPS |
|---|---|---|
| Algo Registration | Not required with the exchange. | Mandatory registration with the exchange, facilitated by the us. |
| Algo ID Tagging | Orders must be tagged with a generic Algo ID: 99999. This will automatically be done at our end. | Orders must be tagged with a unique Algo ID provided by the exchange upon registration. |
| API Access | Mandatory Static IP must be procured and whitelisted with us. | Mandatory Static IP must be procured and whitelisted with us. |
| Authentication | OAuth / 2FA is required for all API sessions. | OAuth / 2FA is required for all API sessions. |
| Required Docs | None for registration. User must agree to API T&Cs. | User must submit the following to the broker: Strategy Writeup, RMS Writeup, and an Auditor Certificate (as per Annexure 7). We’ll have the infra set up for this soon |
| Our (Upstox’s) Role | Monitor OPS limit & systemically reject any orders exceeding 10 OPS. | Facilitate the entire registration process with the exchange & ensure the correct unique Algo ID for all orders. |
- Static IP will have provisions to be changed once a week.
Steps ahead:
- Adding and whitelisting of statis IPs is live for all apps in the “My Apps” section.
- Ensure that only once app is active. Other apps will automatically be dormant.
- Regarding exchange approval of >10ops Algos: We are in-process of building the needed infrastructure for the entire process that includes - Submitting required documents (with samples), access to Mock sessions, Family IP sharing etc. We’re in-touch with the exchanges for fixate on the framework and will keep you posted as these developments take shape.
We believe these changes are a net positive step forward. While these new requirements involve some adjustments, they'll ultimately serve to protect all parties involved!
Best,
Mohit
Team Upstox