The Securities and Exchange Board of India (SEBI) has issued a revised framework for handling technical glitches in stock brokers’ electronic trading systems, narrowing applicability, expanding exemptions, simplifying reporting and rationalising related technology requirements and financial disincentives. The updated framework supersedes SEBI’s November 2022 circular on the same topic. The framework applies to stock brokers providing IBT/STWT trading platforms with more than 10,000 registered clients (excluding closed accounts) as of 31 March of the previous financial year, with stock exchanges to disseminate the list of covered brokers. A technical glitch is defined as a malfunction in a broker’s electronic system (including outsourced systems) affecting trading or risk management functions for a contiguous period of five minutes or more during a trading session, but excludes specified issues such as disruptions at global cloud or other global technology providers, technical issues at MII, KYC account opening processing glitches, back-office issues not impacting trading and settlement, bank or payment gateway failures, and issues limited to decision-support tools (for example charts or profit and loss statements). Covered brokers must notify exchanges and clients within two hours of a glitch, submit a preliminary incident report by T+1 (or the next trading day if T+1 is a trading holiday), and provide a root cause analysis report within 14 working days, using the common submission portal Samuhik Prativedan Manch; exchanges will publish reported glitch incidents on their websites and continue independent monitoring via API-based Logging and Monitoring Mechanism (LAMA). Stock exchanges will issue detailed implementation guidelines, including on capacity planning, software testing and change management, LAMA parameters and log preservation, and a revised business continuity and disaster recovery regime that is rationalised by broker size and technology dependency, with smaller brokers excluded from BCP/DR applicability. Exchanges are also required to rationalise the financial disincentive structure based on exempted glitches, whether glitches are major or minor, and frequency of occurrence, with certain scenarios excluded from financial disincentives such as a glitch affecting only one mode (mobile or web) while the other continues to function and glitches deemed minor in nature or impact.
Securities & Exchange Board of India 2026-01-09
Securities and Exchange Board of India revises stock broker technical glitch rules and limits scope to brokers with over 10,000 clients
The Securities and Exchange Board of India (SEBI) has revised its framework for managing technical glitches in stock brokers' electronic trading systems, narrowing applicability, expanding exemptions, and simplifying reporting. The framework, which supersedes the November 2022 circular, applies to brokers with over 10,000 clients and includes detailed guidelines on incident reporting, capacity planning, and financial disincentives.