Nearly a decade after India’s stock markets started suffering frequent technical glitches, market regulator SEBI is now taking the risk off traders’ shoulders. Come October 2023 and traders will be allowed to cut their positions or close them via a separate platform if their brokers’ systems suffer technical glitches or come under cyber attacks.
SEBI has asked the exchanges to jointly prepare an investor risk reduction access (IRRA) platform. The move comes in the backdrop of a rise in instances of glitches in trading members’ (TMs) systems. In such cases, investors with open positions are at the risk of non-availability of avenues to close their positions, particularly if markets are volatile, SEBI said.
Earlier this month, SEBI chief Madhabi Puri Buch had said they were worried about the losses to investors due to tech glitches. “We also worry about cyber security and technical disruptions when frameworks of large brokers with dated technology do not hold up under pressure. During market volatility, it leaves investors vulnerable and we are keen on protecting them from such disruptions,” Buch had said.
“But we will not encourage claims of losses of any kind — real or imaginary,” she added.
This is another major step towards safeguarding investors and traders from loss due to tech glitches at the brokers’ end. In November, the regulator had directed stock exchanges to impose “financial disincentives” on brokers for technical glitches at their end.
Leading brokers like Zerodha, Upstox and ICICI Direct have witnessed social media outrage on a couple of occasions this year as their systems suffered major glitches.The IRRA will support multiple segments across multiple exchanges and they should ensure credible and periodic testing of the platform is carried out from time to time for the smooth functioning of the service, SEBI said.
“The move will force brokers to keep their systems well oiled and bring accountability. The disaster recovery sites of some brokers remain on papers but all that will now be corrected,” said Pradeep Khandelwal, former executive director, Edelweiss Custodial Services.
“In case of disruptions after the cut-off time for enablement of IRRA service, exchanges, based on their assessment and in consultation with SEBI, can extend market hours, if needed,” the regulator added.