SEBI Proposes Easier Tech-Glitch Norms In Brokers' Trading Systems

The Securities and Exchange Board of India proposed on Monday easier technical glitch norms in brokers trading systems. The regulator has now redefined technical glitch and excluded issues that happen after trading hours or issues that are outside the broker's control.

The new framework will be applicable only to brokers that have over 10,000 clients, while about 457 small brokers will be exempted from the new norms. The new norms will ease reporting rules, according to the notification from SEBI. It will give the brokers more time to report, and it will also consider holidays.

According to the new norms, there will be a common reporting platform to avoid multiple filings. It will also rationalise penalties and compliance requirements to make them simpler and fairer.

A technical glitch stands for any issue in the story broker systems, be it in the hardware, software, networks, processes or any products or service in electronic form. This could also be due to a handful of reasons, such as cyber-attacks, inadequate infrastructure or any variance from the normal course of operations.

As per the earlier mandated reporting requirements, brokerages are supposed to report any such technical glitch issue to the stock exchanges immediately but not later than an hour from the occurrence. In addition to this, they have to submit a preliminary report within T+1 day where T stands for the day of the glitch.

Meanwhile, a root cause report with more profound details is supposed to be submitted within 14 days of the glitch.

To prevent glitches, brokers have to ensure their systems can handle at least 1.5 times the highest peak load in a quarter. They are also required to monitor real-time system usage and set up alerts if it exceeds 70% of capacity. All software changes undergo rigorous testing before deployment, including automated testing, security checks, and change management processes.