SEBI also proposed that penalties should not apply in cases where glitches do not disrupt services for clients
| Photo Credit:
HEMANSHI KAMANI/Reuters
The Securities and Exchange Board of India (SEBI) has proposed changes to its rules on handling technical glitches at stock brokers’ systems, including redefining what constitutes a glitch, easing financial disincentives, and limiting the scope of the rules to larger brokers.
The markets regulator has suggested narrowing the definition of “technical glitches” to exclude malfunctions that happen after trading hours or those outside a broker’s control. It also proposed that penalties should not apply in cases where glitches do not disrupt services for clients.
The revised framework would apply only to brokers offering internet-based and securities trading through wireless technology (IBT/STWT) platforms and having more than 10,000 clients as of March 31 of the previous financial year. This would exclude around 457 smaller stock brokers from the ambit of the framework.
“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 said in a draft paper on Monday. .
Public comments on the proposals have been invited until October 12.
Centralised portal
To enhance transparency and cut duplication, the regulator has proposed centralising glitch reporting through a single portal. Brokers would be required to inform both exchanges and their clients within two hours of any incident, while exchanges would, in turn, disclose the details on their websites.
Brokers would also be required to update clients through their own websites, SMS, emails, or pop-up alerts. In addition, they would need to submit a preliminary incident report to the exchange by the next trading day (T+1) and submit a detailed root cause analysis within 14 calendar days. Both reports would be routed through a new common portal called Samuhik Prativedan Manch.
The move follows concerns raised by industry participants over the regulation’s scope and rigidity. The earlier framework on technical glitches was rolled out in November 2022, with detailed guidelines issued by exchanges the following month.
Published on September 22, 2025
