The Securities and Exchange Board of India (SEBI) has proposed modifications to its regulations regarding the management of technical glitches within stock brokers’ systems. These changes aim to redefine what constitutes a glitch, reduce financial penalties, and focus the new rules primarily on larger brokers.
SEBI suggests refining the definition of “technical glitches” to exclude issues occurring after trading hours or those that are beyond a broker’s control. Additionally, the authority proposed that penalties would not be applicable in cases where the glitches do not affect client services.
The updated framework would target brokers that provide internet-based and securities trading through wireless technology (IBT/STWT) platforms, specifically those with more than 10,000 clients as of March 31 of the prior financial year. This adjustment would exempt approximately 457 smaller stock brokers from the new regulations.
“This will result in ease of compliance for such stock brokers, considering their low clientele base and relatively less technology dominance in their trading services,” SEBI noted in a draft paper issued on Monday.
Public feedback on these proposals is open until October 12.
Centralised Portal
To improve transparency and reduce redundancy, SEBI has proposed the centralization of glitch reporting via a single portal. Brokers will be required to inform both exchanges and their clients within two hours of any incident. Subsequently, exchanges will disclose incident details on their websites.
Furthermore, brokers must communicate updates to their clients through their websites, SMS, emails, or pop-up alerts. A preliminary incident report must be submitted to the relevant exchange by the next trading day (T+1), alongside a comprehensive root cause analysis within a 14-day window. Both documents will be channeled through a new common portal named Samuhik Prativedan Manch.
These recommendations come in response to industry concerns regarding the previous regulation’s broad scope and rigid nature. The earlier framework addressing technical glitches was implemented in November 2022, with further detailed guidelines released by exchanges the following month.
Published on September 22, 2025.
