The Securities and Exchange Commission of Pakistan (SECP) has issued a Concept Paper proposing a regulatory framework for algorithmic trading in Pakistan’s capital markets, aiming to promote innovation while ensuring investor protection and market integrity.
According to a series of posts by the SECP on X (formerly Twitter), the framework draws on international best practices and clearly defines the responsibilities of key participants. Stock exchanges will be responsible for registration and surveillance, brokerage firms must implement stringent internal controls, and third-party technology providers are expected to meet compliance standards set by the regulator.
The SECP has invited public and industry feedback on the proposal, encouraging stakeholders to send their comments to algo.trading@secp.gov.pk by June 14, 2025.
Algorithmic trading, also known as algo trading, refers to the use of computer programs and mathematical models to execute trading orders automatically based on predefined criteria such as price, volume, timing, or complex market indicators.
By relying on speed, accuracy, and reduced human intervention, algorithmic trading allows large volumes of trades to be executed in milliseconds, improving market liquidity and efficiency. However, it also introduces systemic risks, such as flash crashes or market manipulation, which is why regulators like SECP are developing frameworks to monitor and control its use.
