Sebi asks exchanges to set up system shielding against broker's tech glitch

IRRA service will be enabled upon the request of stockbrokers facing glitches that disrupt trading

The Securities and Exchange Board of India (Sebi) has asked stock exchanges to set up an Investor Risk Reduction Access (IRRA) platform to enable investors to square-off or close their open positions and cancel pending orders in case of a technical glitch at the stockbroker.

The capital markets regulator, in a circular issued on December 30, said that the IRRA service will support multiple segments across exchanges. The service will be enabled upon the request of stockbrokers facing technical glitches that disrupt trading.

Stock exchanges will also be able to initiate the service suo moto by monitoring parameters like connectivity, order flow and social media posts.

While investors will be able to close or cancel pending positions, IRRA will not permit any action that increases their risk.

In any situation of technical glitch and disruption from the end of a stockbroker, investors with open positions are at risk of non-availability of avenues to close their positions, particularly if markets are volatile.

Investors of an affected trading member will be informed about the IRRA service availability through email, SMS, and a public notice on exchanges’ websites.

On availability, investors will log in using their unique client code or PAN number which will be authorized through a one-time password (OTP) on their registered mobile numbers and email.

“As the respective business continuity plans, if any, of the trading members (TMs), may not be able to prevent disruption in some cases like TM being unable to move to Disaster Recovery Site within stipulated time, cyber-attacks etc., it has been decided that a contingency service shall be provided by the stock exchanges in the event of such disruption,” said Sebi.

Stock exchanges and clearing corporations have been directed to put in place the appropriate systems by October 1, 2023.

Stock exchanges will be required to issue details like cut-off times, scenarios of open positions, framework for reverse migration, make amendments to relevant bye-laws and will need to update the markets regulator on the status of implementation in their monthly reports.