UBS has received regulatory approval from the Securities and Exchange Board of India (SEBI) to offer its smart order routing (SOR) technology in the country.
Although no official release date has yet been announced, UBS has confirmed that it expects the technology to be in use by clients by the end of the year.
SEBI outlined the regulatory framework for SOR in August 2010. However to date, only a handful of brokers have been approved to supply SOR services, in part due to disputes between the Bombay Stock Exchange (BSE) and its larger rival, the National Stock Exchange, over the routing of orders, use of colocation facilities and SOR authorisation processes.
A further limitation of SOR is the lack of interoperability between India's two clearing houses, each of which is partially owned by one of the two exchanges. In some cases, the price improvement achieved by routing between venues may be offset by higher clearing costs.
Brokers already approved for offering SOR include Credit Suisse and Deutsche Bank. RBS has also applied for regulatory approval for launching its SOR capabilities in India.