NewsStocksIndian Algorithmic Trading Market Set to Reach $1.55 Billion by 2033 Amid SEBI Policy SupportIndian Algorithmic Trading Market Set to Reach $1.55 Billion by 2033 Amid SEBI Policy Support
India's algorithmic trading market is projected to reach $1.55 billion by 2033, growing from $562 million in 2024 at a 9.50% CAGR. SEBI has implemented comprehensive regulatory frameworks including retail access provisions and the Past Risk and Return Verification Agency. Currently, algo trades account for 54% of cash market activity and 67% of F&O segment activity, with AI/ML-based strategies driving future growth.
*this image is generated using AI for illustrative purposes only.
India's algorithmic trading market is witnessing unprecedented growth, with market research projecting the sector to reach $1.55 billion by 2033. This expansion is being driven by supportive regulatory measures from the Securities and Exchange Board of India (SEBI) and significant improvements in cloud infrastructure technology.
Current Market Dominance
Algorithmic trading has already established a commanding presence in India's financial markets. According to recent NSE reports, algorithmic trades now represent a substantial portion of market activity across different segments.
| Market Segment | Algo Trading Share | Period |
|---|---|---|
| Cash Market | 54% | Current fiscal till November |
| Futures & Options | 67% | Current fiscal till November |
Growth Projections and Market Expansion
The IMARC Group's market research reveals robust growth expectations for the algorithmic trading sector. The market is projected to more than double over the next decade, supported by technological advancements and regulatory clarity.
| Parameter | Value |
|---|---|
| 2024 Market Size | $562 million |
| 2033 Projected Size | $1.27 billion |
| CAGR (2025-2033) | 9.50% |
| Primary Growth Driver | AI/ML-based strategies |
The study forecasts this compound annual growth rate will be sustained through 2033, with artificial intelligence and machine learning-based trading strategies serving as key catalysts for expansion.
Regulatory Framework and Safeguards
Recognizing the rapid growth of automated trading, SEBI has implemented comprehensive regulatory measures to ensure market integrity and protect retail investors. In February, the regulator introduced a framework specifically designed to provide retail clients access to algorithmic trading through their brokers.
The regulatory framework establishes clear accountability structures and compliance requirements:
- Broker Responsibility: Brokers are considered principals for API-based orders
- Algorithm Provider Role: Algorithm providers function as agents in the trading process
- Unique Identification: Each order must carry a unique identifier for tracking
- Registration Requirements: Retail-developed algorithms must be registered with exchanges through brokers
- Approved Provider Lists: Exchanges maintain comprehensive lists of approved algorithm providers
- Due Diligence Standards: Brokers must perform thorough due diligence before onboarding algorithm providers
Performance Verification and Credibility Measures
SEBI has established the Past Risk and Return Verification Agency to address concerns about performance claims in the algorithmic trading space. This agency serves a crucial role in maintaining market credibility by auditing and validating performance statistics before they are marketed to investors.
The verification process adds an essential layer of credibility to test results and historical returns, ensuring that investment advisers, research analysts, and algorithmic strategy providers present accurate performance data to potential clients.
Industry Perspective on Future Development
According to Nitesh Khandelwal, Co-Founder of QuantInsti, an interactive learning platform, the mainstream adoption of systematic trading strategies will depend on multiple factors beyond regulation. The availability of comprehensive learning tools and robust infrastructure will play crucial roles in determining the sector's growth trajectory.
Khandelwal emphasized that exchange-led empanelment of algorithm providers, combined with mandatory registration of strategies, should significantly enhance transparency and investor protection. This approach clarifies the distinct roles of strategy creators, execution platforms, and brokers, creating a more structured and accountable trading environment.
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