Now it is in the news that SEBI is proposing some guidelines for algo trading.
http://economictimes.indiatimes.com...ork-for-algo-trading/articleshow/53560259.cms
Finally, after the public scandal and expose, it seems SEBI has taken blinkers off its eyes to do something about retail traders being robbed in broad daylight with the help of exchanges. The fact that exchanges provide co-location and give quicker access to order flow and deeper look at the order book to algos is same as treating two customers differently. In this case, the exchanges help the big financial institutions to rob the retail traders in front of it's very eyes, while also helping them to do so in the process!!!
Here is a snapshot of my orders that I had placed before NFP data, which is a big event. There was a lull in trading, and the difference between bid/ask was more than rupees 50. So I would see the latest offer, and quote 1, 5 or even 10 or 20 rupees less than the best offer, but every time that I did so, my offer would be foiled even before I could blink my eye.
I made 7 attempts to sell Silver, but due to algo reading and knowing my offer, would jump in the queue and make a lower offer and get ahead of my trade. So in a span of about 5 minutes, I made 7 lower manual offers, which got frontrun by algos, and none of my orders could be executed. Hence I had to cancel my order.
Now imagine the number of traders trading and number of trades made daily. And you will realize the extent of looting going on officially by FII's/HNI's with the help of exchanges. I do not mind algo trading - but they should not have access to my order information pain and simple. And if they make an offer, it should stand for atleast 5-10 seconds. The world will not come to an end, nor trading volume dry up if this happened. This is the minimal time required by an individual trader to amend his order.... Granting access to best offer comming into the system to algos, is like giving another student access to my answer in the exam and enabling him to better it. This is wrong. Competition and free markets mean equality for all traders and not prefrential treatment to a few at the cost of millions of other traders. So hope that SEBI does what it says it will do to bring transparency and openness on stock and commodity exchanges and stop the daylight robbery of traders.