Consider the following statements with reference to Algorithm trading It is a method of digital trad...........

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Consider the following statements with reference to Algorithm trading:

It is a method of digital trading which uses cryptographic algorithms and state of the art blockchain technology.
Recently SEBI has banned algorithm trading in the stock exchanges of India.

Which of the statements given above is/are correct?

1 only

2 only

Both 1 and 2

Neither 1 nor 2

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Explanation:

Algorithmic trading (also called automated trading, black-box trading, or algo-trading) uses a computer program that follows a defined set of instructions (an algorithm) to place a trade. The trade, in theory, can generate profits at a speed and frequency that is impossible for a human trader.

The defined sets of instructions are based on timing, price, quantity, or any mathematical model. Apart from profit opportunities for the trader, algo-trading renders markets more liquid and trading more systematic by ruling out the impact of human emotions on trading activities.

Algo trading is allowed in India and is legal. India introduced algo trading in 2008 with SEBI opening the doors of algo trading for institutional investors.