sebi algo trading rules

As of July 2026, automated trading through Zerodha Kite Connect is allowed for retail traders in India — but only inside SEBI's retail algorithmic trading framework, which became mandatory on 1 April 2026. In plain terms: you can run your own algo through the Kite Connect API without registering it with the exchange, as long as you stay under 10 orders per second, send orders only from a static IP that Zerodha has whitelisted, and use the strategy for yourself and immediate family only. Selling or sharing algos with other traders is a separate, tightly regulated activity. Here is exactly what is and isn't permitted.In my 8+ years building Pine Script strategies and Python order bridges for clients across 14+ countries, 2025–26 has been the biggest regulatory shift I've seen for Indian retail automation. I re-architected several client Kite Connect bots this year purely to satisfy the new static-IP and order-rate rules. This is the compliance summary I now send every client before we write a single line of code.How the Zerodha Kite Connect automated trading policy works in 2026Zerodha does not invent this policy on its own — it implements SEBI's rules through the exchanges (NSE and BSE). The framework comes from SEBI's circular Safer participation of retail investors in algorithmic trading, dated 4 February 2025, followed by NSE's implementation circular in May 2025. Brokers were then given a phased rollout:October 2025 — exchanges began registering broker and vendor algo products.5 January 2026 — non-compliant brokers were barred from onboarding new retail API clients.1 April 2026 — the full framework became mandatory for every stockbroker in India.So the rules below are not proposals — they are live and enforced right now. If you want the developer-side, hands-on version of this, I wrote a separate guide to building SEBI-compliant algos for Zerodha and Fyers.What retail traders CAN do on Kite ConnectAutomate your own strategy without exchange registrationSEBI treats API-based trading as a legitimate quality-of-life tool for retail traders. If your bot places orders below the Threshold Orders Per Second (TOPS) — set at 10 orders per second, per exchange, per client — you do not need to register the strategy with the exchange. Zerodha has applied a 10-orders-per-second limit on Kite and Kite Connect for years, so most genuine retail bots already sit well under it.Use a whitelisted static IPOrder placement via the API must originate from a static IP that you register in the Kite Connect developer console. Requests from any other IP are rejected. Two clarifications Zerodha has confirmed: the static IP is needed only for order placement (pure market-data or read-only calls do not need it), and immediate family members may share the same static IP. Both IPv4 and IPv6 are accepted, and there is no mandate that the IP be India-based — though I host client bots on AWS Mumbai (ap-south-1) for lower latency.Trade for yourself and immediate familyA self-built, exchange-approved algo may be used by you and your immediate family — defined as spouse, dependent children and dependent parents — and no one else. You may not sell it, rent it, or run it inside a stranger's account.Run one unregistered algo per API keyOnly one API key per user may run an unregistered sub-10-OPS algo. Creating multiple API keys to sidestep the threshold is explicitly disallowed. Every order routed through the API is also tagged with an exchange identifier (an Algo-ID) — a generic tag for unregistered retail algos, or a unique Algo-ID for registered ones — so the exchange can trace any automated order back to its source.Kite Connect algo categories at a glanceCategoryExchange registrationStatic IPWho can use itSpecial licenceRetail self-algoOnly if >10 OPSMandatory (yours)You + immediate familyNoneVendor white-boxAlways (registered once)Vendor or clientAny client via brokerExchange empanelmentVendor black-boxAlwaysVendor or clientAny client via brokerSEBI Research Analyst licenceBroker algoAlwaysBroker or clientBroker's clientsHandled by brokerNeed a Kite Connect bot that stays inside these rules? I build SEBI-aware Python and Pine Script automation with static-IP setup and order-rate throttling baked in. WhatsApp me on +91 77352 68199 for a quick compliance review of your current setup.What retail traders CANNOT doThis is the part where I have to be blunt with clients, because overstepping here is what draws regulatory attention:You cannot sell, rent, or distribute your algo to anyone outside your immediate family. Sharing a profitable strategy with friends for a fee makes you an unregistered algo provider.You cannot run above 10 OPS unregistered. Cross the threshold and the strategy must be registered with the exchange and carry a unique Algo-ID before it can keep running.You cannot share account credentials or run pooled money-management where one person places orders for many accounts. The static-IP rule exists specifically to stop this.You cannot sell a black-box algo without a SEBI Research Analyst licence plus the ongoing reporting that comes with it.Selling or distributing algos — the vendor rulesIf you want to offer strategies to other traders, you become an algo provider and must be empanelled with the exchanges through a broker. SEBI splits vendor algos into two types:White-box — the logic is disclosed and replicable (for example, a moving-average crossover). It is registered once with the exchange and can then be offered to any client.Black-box — the logic is hidden from the user. To sell one, the provider must hold a SEBI Research Analyst (RA) licence, maintain and publish a research report for the strategy, and report any change to the exchange before rolling it out.One important nuance for developers: if you are simply a coder-for-hire — writing Python to automate a client's own strategy in their own account — Zerodha has clarified you do not need any registration. That order is treated as a client algo, and it is a big part of my Pine Script and automation development work.Where TradingView webhooks and bridges fitSemi-automation — a TradingView alert firing a webhook into a bridge that places the Zerodha order — is still treated as a client algo. The same conditions apply: whitelisted static IP, stay under 10 OPS, self and family use only. Zerodha does not natively accept a TradingView webhook as an order, so you need an API bridge in between. I use the same compliant pattern for other brokers too; see my Fyers webhook automation walkthrough and, for MetaTrader users, my MT4/MT5 automation service.What Kite Connect costs in 2026Pricing changed alongside the regulations. Today Kite Connect has two tiers: a free Personal plan (order, GTT and portfolio APIs) and a paid Connect plan at ₹500 per month per API key for live and historical market data. Order-placement and account APIs have been free since March 2025, and the data price dropped from ₹2,000 to ₹500 on 6 May 2025. I break down the tiers, rate limits and hidden costs in my Kite Connect API pricing and rate-limits guide.My compliance checklist before you automateThe single most common fix I make on client bots is adding an order-rate guard so they never accidentally cross 10 OPS during a fast market. Here is the lightweight throttle I wrap around every retail Kite Connect order:import time from kiteconnect import KiteConnect kite KiteConnect(api_key'your_api_key') kite.set_access_token('your_access_token') # SEBI retail rule: stay under 10 orders/second so your # strategy does not need exchange registration. MAX_OPS 8 # safety margin below the 10 OPS limit _window, _count 0, 0 def place_order_safely(**params): global _window, _count now int(time.time()) if now ! _window: _window, _count now, 0 if _count > MAX_OPS: time.sleep(1) # wait out the current second _window, _count int(time.time()), 0 _count + 1 return kite.place_order(varietykite.VARIETY_REGULAR, **params)Beyond that, my checklist is simple: register one static IP (plus a backup line), keep to one API key, confirm the account is yours or immediate family, and re-authenticate the daily access token before the pre-open — Kite Connect tokens expire every day by design, which already satisfies SEBI's auto-logout requirement.Want your automation checked before it goes live? Message me directly on WhatsApp at +91 77352 68199 and I'll tell you whether your Kite Connect strategy is compliant — and exactly how to fix it if it isn't.FAQIs automated trading allowed on Zerodha in 2026?Yes. Retail traders can automate trades through Kite Connect as long as they stay under 10 orders per second, use a broker-whitelisted static IP, and trade only for themselves and immediate family. Higher-frequency or third-party strategies need exchange registration.Do I need to register my algo with the exchange to use Kite Connect?Not if your own strategy stays below 10 orders per second. Above that threshold, or if you sell the strategy to others, exchange registration and a unique Algo-ID are mandatory.Is a static IP mandatory for Zerodha Kite Connect?Yes, for order placement. You must register a static IP in the developer console; orders from any other IP are rejected. Read-only market-data calls do not require it, and family members can share one IP.Can I sell my Zerodha algo strategy to other traders?Not directly. You would need to become an exchange-empanelled algo provider through a broker, and black-box strategies additionally require a SEBI Research Analyst licence.Does Zerodha charge for the Kite Connect API in 2026?Order and account APIs are free. Live and historical market-data access costs ₹500 per month per API key on the Connect plan.Disclaimer: This article is for educational purposes only and is not investment, legal, or compliance advice. Trading and investing in securities and derivatives carry a substantial risk of loss and are not suitable for every investor; automated trading can amplify losses. Regulations change — always verify the current SEBI, NSE, BSE and Zerodha policies with the official source and your broker before deploying any algo. Past performance does not guarantee future results.

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