The Securities and Exchange Board of India (SEBI) on Monday proposed modifying the definition of technical glitches at stock brokers’ online trading system (OTS), rationalising the financial disincentive structure as well as simplifying the eligibility criteria to exclude smaller brokers.
“The definition is proposed to be modified to exclude technical glitches occurring after trading hours and technical glitches which are not under the control of stock brokers, SEBI said in a circular.
“Technical glitch shall mean any malfunction in the electronic system of stock broker, including malfunction in its hardware, software, networks/bandwidth, processes or products or services, directly or indirectly related to trading and risk management, occurred during trading session of stock exchange,” SEBI said.
Public consultation on these proposals is open till October 12, 2025.
Relief for smaller brokers
The new framework would be made applicable to stock brokers providing IBT/STWT trading platforms and having more than 10,000 registered clients as on March 31, 2025. This would ease compliance for 457 smaller stock brokers with low clientele and relatively-less technology dominance in their trading services.
“SEBI’s updated framework is a progressive step that helps brokers focus on what matters most — the resilience and performance of our trading and risk-management systems,” said Dale Vaz, CEO of Sahi, a Bengaluru-based brokerage.
Clearer reporting timelines
The previous framework to address technical glitches in stock brokers’ electronic systems was issued on November 2022 and the stock exchanges issued detailed guidelines on December 16, 2022. SEBI invited opinions from stakeholders and industry forums regarding the framework. These feedback was discussed with stock brokers and SEBI then analysed brokers’ recommendations.
The current circular aims to bring specific clarity in the definition of technical glitch and rationalise the financial disincentive structure. Brokers must inform the exchanges and clients (via their own websites, SMS, email, or pop-up alerts) within two hours of a glitch. Preliminary incident reports must be submitted within one trading day (T+1), with detailed root cause analysis due within 14 calendar days.