Point is all softwares to be used on the exchange are to be approved from that exchange. What's the need for this bureaucracy?
So, whats wrong with you or me buying an algo based software, if we see it is leading to profits? Again the point is we are not free to choose. And frankly, this aspect of trying to shield the retail trader has put him at a disadvantage.
An approved software vendor who sells software for arbitrage trading told me I can only buy his software if I am a direct exchange member. He was prohibited from selling it to anyone else. And a lot of brokers are using it to earn cash/futures & futures/futures arbitrage, but if we use amibroker or similar software, its illegal. Its nothing but a new apartheid.
Regarding interpretation, no retail trader is going for a writ in the supreme court to test what SEBI meant. Risk management is allright but faster entry would most probably be called automated trading since the bids would not be keyed in by hand, but by some sort of strategy. They want to shield the retail trader
of course, from getting any edge against the professional firms.