The Securities and Exchange Board of India (SEBI) has settled enforcement proceedings against 111 stockbrokers allegedly linked to algorithmic trading platforms that promised investors “guaranteed returns” or “consistent profits.” The move marks the closure of a broad regulatory action under the ‘Settlement Scheme on Association with Certain Algo Platforms, 2025.’
According to SEBI, these cases stemmed from an earlier investigation in which certain algo platforms were found marketing strategies that guaranteed consistent profits. The regulator also identified that the APIs of 122 registered brokers were integrated with these platforms, raising concerns about violations of compliance norms.
Following the probe, SEBI initiated adjudication proceedings against the brokers for alleged breaches of its September 2, 2022, circular on algo trading and the SEBI (Stock Brokers) Regulations, 1992, particularly provisions related to integrity, fairness, and due diligence.
To reduce regulatory burden and address a large number of similar cases, SEBI introduced the 2025 Settlement Scheme, allowing eligible brokers to settle pending proceedings by paying a fine without admitting or denying guilt. The scheme was open from June 16 to September 16, 2025, later extended to October 16, 2025 after requests from market participants. A total of 111 brokers opted in within the stipulated period.
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Each broker paid ₹1 lakh, resulting in total collections of ₹1.11 crore. The settlement covers major brokers including Zerodha, ICICI Securities, HDFC Securities, and Angel One, as well as mid-sized and regional market participants.
SEBI’s order states that for these 111 brokers, it “shall not continue the proceedings already initiated” and will not initiate further action for the specified violations. However, the regulator clarified that the settlement can be revoked if misrepresentation is discovered or settlement conditions are breached.
“This order is without prejudice to SEBI’s right to take appropriate action, including reopening proceedings if any representation by the applicants is found untrue or if undertakings are breached,” SEBI noted.
Experts say the decision reflects SEBI’s heightened scrutiny of the rapidly growing algorithmic trading ecosystem, particularly platforms targeting retail investors. Over the past few years, SEBI has tightened rules to ensure that unregulated strategies and misleading claims do not expose investors to undue risk.
The September 2022 circular explicitly barred brokers from associating with platforms offering algorithmic strategies with guaranteed returns and mandated stronger oversight over API integrations. This settlement demonstrates SEBI’s approach of enforcing regulations while efficiently resolving enforcement backlogs.
The regulator’s intervention highlights the importance of compliance in the algorithmic trading sector and reinforces its commitment to protecting retail investors from potentially misleading platforms. Analysts believe such measures will strengthen investor confidence and promote responsible trading practices in the growing Indian capital market.
About the author – Ayesha Aayat is a law student and contributor covering cybercrime, online frauds, and digital safety concerns. Her writing aims to raise awareness about evolving cyber threats and legal responses.
