Relief for brokers as stock exchanges ease technical glitch norms

The exchanges have also revised the list of instances that will be considered a technical glitch, excluding those where the broker is not at fault

Stock exchanges relaxed norms on financial disincentives for stock brokers due to technical glitches effective from Tuesday.

 

Disruptions due to issues at market infrastructure institutions (MIIs), back-office or operational issues that do not impact trading and settlement, and technology issues around processing of new trading accounts or due payment gateways will be exempted from monetary penalties.

 

Such glitches, however, will have to be reported by stock brokers according to guidelines.

 

The exchanges have also revised the instances which will be considered a technical glitch excluding instances where the broker is not at fault.

 

The stock exchanges published the revised guidelines and the details on Friday, following approval by the Securities and Exchange Board of India.

 

 

The first and second instances of technical glitches will lead to an observation letter and an administrative warning, respectively. 

 

However, from the third instance (in the same financial year) onwards, penalties will be imposed. 

 

Specified stock brokers, usually larger players, will have to pay ₹50,000 for every instance, while others will have to pay a penalty of ₹20,000. This would increase progressively for further glitches.

 

After the sixth instance, stock brokers can be restricted from onboarding new clients until the exchange is satisfied with corrective measures.

 

“While levying penalty of ‘no on-boarding of new clients’, only those technical glitch incidents will be considered where more than 5 per cent of active clients (as on previous trading day of the glitch day) duly certified by the auditor are affected due to the glitch,” notes the circular.

 

Further, an upper limit has also been set under the framework for penalties related to delay in informing the exchanges about the glitch or submitting the preliminary incident report or root-cause analysis report. 

Timeline extended for implementation of algo trading norms 

The Securities and Exchange Board of India on Tuesday extended the impleme­ntation timeline for new norms for algo trading for retail traders to August 1.  The implementation standards by the brokers’ industry standards forum were to be issued by April 1, however, stock exchanges requ­ested an extension as they need further deliberation. The implementation stand­ards will now be made effective from May 1, thus pushing the date for applicability of the new framework.