Every algorithmic order traced, registered, and accountable: SEBI's framework is now mandatory

Register every algorithm and obtain an exchange-assigned Algo ID

SEBI Circular, Algo ID Requirements Since April 1, 2026, every order placed by an algorithm must carry an exchange-assigned Algo ID. Orders without a valid Algo ID will not be executed. This applies whether the order originates from a broker's proprietary system, a third-party provider, or a self-built retail strategy. White-box algorithms require single exchange registration; black-box algorithms require the provider to hold a SEBI Research Analyst license with periodic performance reporting.

Nexovern's telemetry captures which algorithms generated which orders, maintaining a correlated record of strategy execution that maps directly to exchange-assigned Algo IDs and supports registration audits.

Implement and maintain kill switches

SEBI Circular, Kill Switch Requirements Brokers and exchanges must maintain emergency stop mechanisms capable of immediately disabling a malfunctioning algorithm. Exchanges can disable specific Algo IDs when irregularities are detected. Kill switches are the primary defense against flash crash scenarios and errant algorithm behavior. Exchanges issue SOPs for testing kill switch procedures through mock trading sessions.

Nexovern's runtime monitoring detects anomalous execution patterns at the session level, providing the behavioral evidence that kill switch activation decisions require and the post-incident audit trail that regulators expect.

Maintain comprehensive execution logs and audit trails

SEBI Circular, Audit Trail Requirements · AI/ML Reporting Directive Brokers must log all strategy execution with comprehensive records. Pre-trade risk checks are mandatory. A five-year audit trail of all API orders must be maintained. For AI/ML systems, the requirement extends to ten-year retention of audit evidence, including reconstructable decision chains showing what models processed, what outputs were generated, and the approval chains followed.

Nexovern captures prompt-level execution records and OS-layer telemetry for every AI-driven trading session, correlated under one identity. The evidence for five-year and ten-year audit trail compliance is generated continuously, not assembled after the fact.

Enforce broker-as-principal accountability across all algo partnerships

SEBI Circular, Broker-as-Principal Model Brokers function as principals responsible for all algorithms operating through their platform. Algo providers must partner with registered brokers; direct exchange connections are prohibited. Brokers must conduct due diligence before onboarding providers, implement IP whitelisting and static IP binding, enforce OAuth-based logins and two-factor authentication, and ensure all API sessions log out automatically before the next market pre-open.

Nexovern's correlated app-layer and OS-layer records provide brokers with continuous visibility into every algo provider's execution behavior, supporting the due diligence and oversight obligations the principal-agent model demands.

File half-yearly AI/ML disclosures (or NIL declarations)

SEBI AI/ML Reporting Directive (2019, expanded 2023 and 2025) Trading members must disclose details of all AI/ML systems used for trading, risk management, or investor servicing. Reports cover application name, type, first-use date, order involvement, safeguards, methodology, and compliance attestation. Entities not using AI/ML must file NIL declarations. Since July 2025, NSE's cross-exchange reporting mechanism allows a single filing shared across NSE, BSE, MSE, MCX, and NCDEX.

Nexovern's automated inventory of every AI system in your environment provides the baseline data for half-yearly filings: which systems are active, what they do, and what safeguards are in place, compiled continuously rather than manually at filing time.

Prepare for board-level AI governance requirements

SEBI Consultation Paper, June 2025 (pending finalization) The proposed governance framework requires a board-approved AI Governance Framework for all regulated institutions. Internal controls, algorithmic audits, model explainability, and fallback plans must be documented and maintained. Human-in-the-loop mechanisms are mandated (specific approach not yet finalized). Regulatory sandbox testing and staff training are required before live deployment of AI/ML trading systems.

Nexovern's continuous monitoring provides the runtime data that board-level governance reviews require: which AI systems are operating, how they behave against policy boundaries, and where human oversight gaps exist.