By Siddhant Mishra
The Securities and Exchange Board of India (Sebi) has directed exchanges and clearing corporations to set up a platform by October 2023, the purpose of which would be to protect investors against any disruption of services at the trading members’ (TM) end.
In a circular issued on Friday, the regulator noted a rise in instances of glitches in TMs’ systems, and that in such instances, investors with open positions were left with no avenue to close their positions, particularly if markets were volatile.
As a result, a platform to provide an Investor Risk Reduction Access (IRRA) service shall be developed to provide investors the opportunity to square off/close the open positions, and/or cancel pending orders in case of disruption.
Following consultations with exchanges and clearing corps, Sebi noted that the existing business continuity plans were not enough to prevent disruptions such as cyber attacks, failure of TMs to move to disaster recovery sites on time, etc.
The regulator states that TMs can request for enablement of the service upon facing technical glitches, and the IRRA shall be enabled.
Also read: Tata Motors, Tech Mahindra, Yes Bank, GMR Airports, L&T, Sun Pharma, Dilip Buildcon, IT stocks in focus
Stock exchanges shall monitor parameters like connectivity, order flow, social media posts, etc, and suo moto initiate enablement of the service, if needed. Exchanges can initiate the service suo moto only if the disruption has hit all the exchanges where the TM is member. In case of disruption in one/some of the exchanges, the TM should request initiation.
Exchanges shall also be required to design a detailed framework for reverse migration from the IRRA system to the TM’s trading system, when the latter’s trading system is revived.
Upon revival, the TM shall update their systems, taking data from the exchanges, and thus ensuring that the latest status of orders and trades is available to investors.
Exchanges shall decide on reverse migration based on various parameters, including the size of the broker, time required for reverse migration, and remaining time of the trading session. Exchanges shall ensure that credible and periodic testing of the platform is carried out from time to time.
Also read: IAF focuses on green tech, expores alternative fuel to cut down emission
The bourses shall issue guidelines, providing details like cut-off times for enablement of the IRRA service, handling of various scenarios of open positions, framework for reverse migration, etc.
In case of disruptions after the cut-off time, exchanges — based on their assessment and in consultation with Sebi — may extend the market hours, if needed.