Sebi chairperson Madhabi Puri Buch on Wednesday said any business model that relies on a black box and that cannot be audited or validated will not be permitted.
She also said since data is a public infrastructure, any attempt by any private party to own them cannot be tolerated.
"We are not for or against algo trading as long as there is sufficient transparency and disclosures. Business models cannot rely on a black box... therefore any claim that cannot be audited and validated cannot be permitted," Buch said addressing the Global Fintech Fest here this morning.
The warnings from the markets regulator come amid reports that it may clamp down on algo trading, which in the past has been misused by certain brokers with the connivance of top NSE officials.
Earlier this month, Sebi had issued new guidelines for stock brokers providing algorithmic trading services after it was found that certain stock brokers provide algorithmic trading facilities to investors through unregulated platforms.
