Definition
API Trading
API trading is the placement and management of orders programmatically through a broker's application programming interface, enabling automated and algorithmic strategies without manual screen-based input.
Several Indian brokers offer trading APIs that let clients fetch market data and submit, modify and cancel orders from their own code or third-party platforms. SEBI has framed rules to bring broker APIs and the algos built on them under supervision, including tagging, registration of algo providers and limits on what retail systems can do.
API trading powers both serious quant strategies and casual retail automation. The regulatory concern is that uncontrolled API-driven algos can generate runaway orders or manipulative patterns, so brokers must implement throttles, risk checks and kill switches around their API access.
Related terms
- Algorithmic TradingAlgorithmic trading is the use of computer programs that follow pre-defined rules on price, timing, quantity and other variables to place and manage orders automatically, with little or no human intervention per order.
- Direct Market Access (DMA)Direct Market Access lets institutional clients route orders straight to the exchange order book using a broker's infrastructure and exchange membership, without manual broker intervention on each order.
- FIX ProtocolFIX (Financial Information eXchange) is a standardised electronic messaging protocol used globally for the real-time exchange of securities order, execution and market-data messages between trading parties.
- SEBI Algo ApprovalSEBI algo approval refers to the regulatory framework under which algorithmic trading strategies must be vetted and authorised by the exchange before deployment, with unique identification and audit trails.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.