Sebi chairman U.K. Sinha said : #Sebi eyes ways to cut risks from high frequency trading

Sebi is also looking at bringing changes in the so-called consent mechanism norms and allowing cases without any market-wide impact to be settled through a mutually agreed fees to the regulator. Sinha was addressing the South Asia Risk summit organized by Thomson Reuters in Mumbai.

“Corporations should be open to a culture of compliance for effective and timely supervision. Sebi and the government are actively working towards streamlining processes and driving use of technology for efficient functioning. Continuous monitoring and supervision is an ongoing challenge but we need to be prepared with robust risk management systems, as we work with the global regulators to build common standards for risk. As a nation, we need to imbibe a culture of appreciating guidelines and regulations, take a forward view and set up systems to analyze early warning signals and alerts which keeps us ahead of the curve,” Sinha said.

On the sidelines of the summit,U.K. Sinha said while Sebi has taken cognizance of the potential problems involved with HFT and has put in place some checks and balances already, like other global regulators, a final solution is yet to be arrived at.

HFT, done through dedicated algorithms, refers to the use of electronic systems, which can potentially execute thousands of orders on the stock exchange in less than a second, which gives them an advantage over conventional traders.

For enabling HFT, brokers set up servers on the exchange premises, typically called co-location. This reduces time it takes for an order to travel to the exchange, giving them a speed advantage over those who are farther away.

U.K Sinha said apart from approaching external advisers on HFT, the market regulator is also independently working with its in-house team to recommend norms to take care of risks arising out of the market.