The Securities and Exchange Board of India (SEBI) has issued notices to over 120 stockbrokers due to their connection with Tradetron, a platform used for algorithmic trading. This is part of SEBI’s ongoing investigation into potential regulatory violations by these brokers.
Some prominent brokers involved in this case include Zerodha, Motilal Oswal Financial Services Ltd., 5Paisa Capital Ltd., and Bajaj Financial Securities Ltd.
Tradetron allows users to automate their trading strategies. However, SEBI’s 2022 circular forbids brokers from associating with platforms that promise guaranteed returns. It seems some strategies on Tradetron were promoted with claims of assured returns, raising concerns about rule violations.
SEBI’s regulations, specifically Regulation 9(f) under the SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992, require brokers to adhere to a strict code of conduct. This investigation aims to determine whether brokers violated these rules by continuing to work with Tradetron.
These notices are part of a larger investigation by SEBI into Tradetron and similar algorithmic trading platforms. Some brokers allegedly continued their partnerships with Tradetron despite previously assuring SEBI that they had cut ties with the platform.
SEBI pointed out that Tradetron’s website displayed trading strategies promising guaranteed returns, which goes against SEBI’s 2022 circular prohibiting brokers from working with such platforms.
In total, 122 brokers are believed to have broken these rules by keeping their APIs connected with Tradetron.
SEBI’s notice also mentioned that Tradetron was showing trading strategies with guaranteed returns on its website (https://tradetron.tech). Brokers associated with such platforms were found to be in violation of SEBI’s circular from September 2, 2022.
This circular required brokers to remove any reference to past or future returns related to an algorithm, or stop working with platforms that made such claims, within seven days of the circular’s release.
Previously, SEBI had asked brokers to explain how their association with Tradetron did not breach the rules outlined in this circular, which targeted “Performance/return claims by unregulated platforms offering algorithmic trading strategies.”
The circular came after SEBI learned that unregulated platforms were offering algorithmic trading services to investors for automated trading. These services were promoted with high return claims and included strategy ratings that could mislead investors into thinking the returns were guaranteed, raising concerns about mis-selling.
The stockbrokers mentioned in SEBI’s notice are: 5Paisa Capital Ltd., AC Agarwal Share Brokers Pvt., Aditya Birla Money Ltd., Adroit Financial Services Pvt., Arham Share Pvt., Arihant Capital Markets Ltd., Asnani Stock Broker Pvt., ATS Share Brokers Pvt., Acumen Capital Market (India) Ltd., Alice Blue Financial Services Pvt., Anand Rathi Share & Stock Brokers Ltd., Angel One Ltd., Ashika Stock Broking Ltd., Ashlar Securities Pvt. (Wisdom Capital), Astha Credit & Securities Pvt., B. N. Rathi Securities Ltd., Bajaj Financial Securities Ltd., Basan Equity Broking Ltd., BGSE Financials Ltd., Bonanza Portfolio Ltd., Centillion Capital Pvt., Choice Equity Broking Pvt., Composite Investments Pvt. (Compositedge), Crosseas Capital Services Pvt., Econo Broking Pvt., Elixir Equities Pvt., Enrich Financial Market Pvt., Excel Stock Broking Pvt., Evermore Share Broking Pvt., FE Securities Pvt., First Global Stockbroking Pvt., Fair Intermediate Investment Pvt., Farsight Securities Ltd., Findoc Investmart Pvt., Finvasia Securities Pvt., Finwizard Technology Pvt., Fortune Capital Services Pvt., Fyers Securities Pvt., GRD Securities Ltd., Ganganagar Commodity Ltd., Geojit Financial Services Ltd., Gill Broking Pvt., Globe Capital Market Ltd., Goodwill Wealth Management Pvt., Growth Securities Pvt., HDFC Securities Ltd., Hensex Securities Pvt., Hem Securities Ltd., ICICI Securities Ltd., IIFL Securities Ltd., Indira Securities Pvt., Indo Thai Securities Ltd., ITI Securities Broking Ltd., India Cements Investment Services Ltd., JK Securities Pvt., JM Financial Services Ltd., Jainam Broking Ltd., Kedia Capital Services Pvt., Kotak Securities Ltd., Kredent Trading LLP., Lakshmishree Investment and Securities Ltd., LSC Securities Ltd., Maitra Commodities Pvt., Mangal Keshav Financial Services LLP., Marwadi Chandarana Intermediaries Brokers Pvt., MLB Capital Pvt., Moneywise Finvest Ltd. (Stoxkart), Mansukh Securities & Finance Ltd., Marwadi Shares & Finance Ltd., Master Capital Services Ltd., Moneylicious Securities Pvt., Motilal Oswal Financial Services Ltd., NCO Securities and Share Broking Pvt., New Berry Capitals Pvt., Nirmal Bang Securities Pvt., Nirman Share Brokers Pvt., Northeast Broking Services Ltd., Navia Markets Ltd. (Tradeplusonline), Nine Star Broking Pvt., Nuvama Wealth and Investment Ltd. (formerly Edelweiss Securities Ltd.), Patel Wealth Advisors Pvt., Paytm Money Ltd., Pentad Securities Pvt., PhillipCapital (India) Pvt., Profitmart Securities Pvt., Prabhudas Lilladher Pvt., Pune e Stock Broking Ltd., R K Stockholding Pvt., Raghunandan Capital Pvt., RKSV Securities India Pvt. (Upstox), RS Wealth Management Pvt., Rudra Shares & Stock Brokers Ltd., Sachdeva Stocks Pvt., Samco Securities Ltd., Sernet Financial Services Pvt., Share India Securities Ltd., Shri Parasram Holdings Pvt., SKI Capital Services Ltd., SKSE Securities Ltd., Sky Commodities India Pvt., SMC Global Securities Ltd., SMIFS Ltd., South Asian Stocks Ltd., SS Corporate Securities Ltd., SSJ Finance and Securities Pvt., Sunlight Broking LLP., Suresh Rathi Securities Pvt., SW Capital Pvt., Sykes & Ray Equities (1) Ltd., Sharekhan Ltd., Swastika Investmart Ltd., Thincredblu Securities Pvt., Tradejini Financial Services Pvt., Tradeswift Broking Pvt., Trustline Securities Ltd., Upstox Securities Pvt., Visual Securities Pvt. Ltd., VNS Finance and Capital Services Ltd. (TradeSmart), Varun Broking India Ltd., Wealth Discovery Securities Pvt., Zebu Share and Wealth Management Pvt., and Zerodha Broking Ltd.
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