SECP Proposes Framework to Regulate Algorithmic Trading

The Securities and Exchange Commission of Pakistan (SECP) has issued a Concept Paper titled “Regulating Algorithmic Trading in Pakistan”, outlining a proposed framework to promote innovation while ensuring market integrity and investor protection. As algorithmic trading gains global momentum for its speed and efficiency, the SECP aims to address associated risks with a robust regulatory structure.

Under the proposal, stock exchanges will manage the registration, testing, and issuance of unique identifiers for algorithmic traders. Brokers must establish strong internal controls, audit mechanisms, and governance frameworks, while third-party algorithm providers will need to comply with applicable laws and standards.

Given that Pakistan is in the early stages of algorithmic trading, SECP suggests a phased rollout, initially restricting access to institutional investors. Expansion to retail investors will be considered later based on market readiness and risk evaluations. The Concept Paper is now open for public consultation on the SECP website, inviting feedback from stakeholders.