Scam-Proofing Algo Trading Software: How to Verify “SEBI Registered” Claims in India

Rishabh Nanda -

Algorithmic trading is on the rise among retail traders in India. What was hitherto the preserve of institutional and proprietary traders is now available to retail traders through APIs, platforms, and fintech solutions. The latest trends and developments indicate that retail algo trading is taking off at a rapid pace as traders seek to automate their trading strategies for speed, unemotional execution, and diversification.

But with opportunity comes risk. One of the biggest confusions in the market today is around the phrase “SEBI registered”, often used liberally by trading software, platforms, and signal vendors.

Understanding what real SEBI compliance means is essential before you trust any platform with your capital.

This blog will examine how one can check the validity of these assertions and stay away from scams or deceptive promises in Indian algo trading.

Why “SEBI Registered” Claims Are Misleading Without Context

SEBI (Securities and Exchange Board of India) is the regulatory body for market intermediaries and platforms. However, software itself is not something SEBI “registers” in isolation.

What SEBI regulates includes the entities and intermediaries involved in trading, such as:

  • Registered Investment Advisers (RIA)
  • Research Analysts (RA)
  • Portfolio Management Services (PMS)
  • Stock brokers and associated entities

A platform claiming “SEBI registered” must clearly specify:

  • The type of registration (e.g., RIA, RA, broker, PMS)
  • A valid SEBI registration number
  • The exact legal entity covered by the registration

If a website simply shows a logo or generic phrase without details, you can verify on SEBI’s public database that it is a red flag.

SEBI maintains an official intermediary database where registration numbers and entity types can be checked. Any genuine registration should match the information available there.

Retail Algo Trading is Now Regulated, But Not All Platforms Understand It

In early 2025, SEBI introduced a new framework for algorithmic trading called “Safer Participation of Retail Investors in Algorithmic Trading.”

Important aspects include:

  • Algorithms must be reviewed and approved at the exchange level via the broker before going live.
  • Order Tagging for Traceability: Every algo order must carry a unique identifier so it can be traced and audited.
  • Broker Responsibility: Brokers are now required to implement risk controls and oversee order rates on behalf of retail clients.
  • API Controls & Security Standards: Algo execution must occur through secure, authenticated APIs with static IPs and encryption rather than open unauthenticated channels.

If the platform claims to provide algo execution but does not connect to the broker systems in a compliant manner, you are effectively executing trades outside the purview of SEBI’s framework.

This was reflected in industry guidance, noting that the new rules are shifting algo trading from unregulated experimentation to a transparent, accountable environment with clear responsibilities for brokers, vendors, and exchanges.

Red Flags to Watch For in "SEBI Registered" Claims

Some standard red flags are:

1. No Verifiable SEBI Registration Number

A legitimate platform would specify the registration number category (RIA, RA, broker, PMS, etc.) as a reference link in SEBI's register. If the entity is not searchable through SEBI's database, the claim is suspect.

2. Ambiguous or No Broker Empanelment Information

Under SEBI's retail algo framework, any automated strategy will have to be implemented through a broker who has Exchange approval for retail algos Orders tagged with unique IDs require operational compliance. Hence, if a platform's documentation does not explicitly state which brokers it is empaneled with, that creates a compliance risk.

3. Guaranteed or Unrealistic Returns

Regulators explicitly caution against promises of assured profits. Market advisories and SEBI guidelines emphasize that no market-linked strategy can ensure profits. A platform's use of eye-catching screenshots or promises of fixed returns is a marketing gimmick rather than a legally binding commitment.

4. Absence of Risk Disclosure Records

Clear risk disclosures, terms of service, and grievance redressal contact details should all be provided by a compliant intermediary. Lack of these basic disclosures weakens any regulatory claim.

5. Requests for Direct Credential Sharing

You should not share your broker login credentials with third-party software. Platforms must use authenticated API keys with robust access control, not manual credential sharing, in accordance with SEBI's API and security guidelines.

What True Compliance Looks Like

A truly compliant provider of algorithmic trading ought to provide:

  • Integration of brokers with exchange-approved APIs
  • Algo tracking and approval via the exchange or broker
  • Audit trails and order logs
  • Net of all charges and risk controls, performance reporting
  • Unambiguous disclosures about SEBI registration

This supports SEBI's belief that automation should enable responsible retail traders with systemic safety and traceability.

Stratzy and Verified Deployment Infrastructure

Buzzword-trading platforms are not all compliant. However, Stratzy and other platforms function within the regulated ecosystem as:

  • SEBI-registered entities with verifiable registration numbers.
  • Execution with broker integration for authorized algo deployment
  • Order tagging and compliance at the exchange level
  • Integrated risk management frameworks
  • Performance dashboards that display real outcomes following expenses and charges

Stratzy guarantees that plans are implemented in a manner consistent with SEBI's safe participation framework, not just promoted as compliant. Retail capital is shielded from operational flaws, and regulatory ambiguity is decreased.

A Practical Approach to Verification

Before investing or providing execution permission:

  1. Check the SEBI intermediary register
  2. Request Broker Empanellment information
  3. Check registration category and number
  4. Risk Disclosures & Documentation
  5. API Integration Norms

If a platform can't answer all of the above verification points, it is an indicatorthat  you are opening yourself up to compliance / operational / regulator risk

Compliance Does Not Restrict Opportunity, It Protects It

The goal of SEBI’s 2025 framework is not to restrict innovation, but to enable safer, more transparent participation by retail investors in algo trading. These days, brokers, exchanges, and software providers have a defined set of duties. In addition to execution automation, retail traders gain from risk controls, accountability, and traceability, all of which were previously lacking in the unregulated ecosystem.

In this context, understanding and verifying exactly what “SEBI registered” means is a core part of protecting your capital and maintaining confidence in automated trading systems.

Get Started with Stratzy: Confident, Compliant, and Transparent

Algo trading in India is expanding rapidly and becoming mainstream among retail traders.

But automation without compliance is not automation at all.

Stratzy offers:

  • SEBI-registered entity with proper disclosure
  • Algorithm deployment through brokers approved by the exchange
  • Established risk controls
  • Clear performance reporting

Rather than facing regulatory uncertainty alone, choose infrastructure aligned with SEBI’s expectations to gain protection, clarity, and scalability.

Explore Stratzy to check registrations, broker associations, and deploy verified algorithm strategies in Indian markets with confidence.

Automate responsibly. Trade with clarity. Grow within the rules.