SEBI Revamps Stock Broker Rules to Ease Technical Glitch Compliance

SEBI has revamped its framework for handling technical glitches in stock brokers' systems, easing compliance and business operations. The new rules focus on brokers with over 10,000 clients, simplifying reporting and exempting minor issues from compliance requirements.

On Friday, the Securities and Exchange Board of India (SEBI) unveiled substantial amendments to its framework concerning technical glitches in electronic trading systems used by stock brokers. The regulatory body aims to reduce compliance burdens and enhance business operations for market intermediaries. The updated standards now only affect brokers with more than 10,000 registered clients, resulting in approximately 60% of brokers being exempt from the revised framework, thus alleviating their overall compliance responsibilities, SEBI announced.

The updated framework offers simplified reporting obligations by extending the time for reporting technical glitches from one to two hours, accounting for trading holidays in report submissions, and consolidating the reporting process to a singular platform, known as the Common Reporting Platform. SEBI introduced numerous exceptions to the technical glitch framework, allowing certain issues to be exempt from compliance scrutiny.

According to SEBI, technical issues occurring outside the brokers' trading systems, glitches that don't impact trading functions, and those with negligible influence have been excluded from the framework. This exemption protects brokers from issues beyond their control and those that do not disrupt their service capabilities. Additionally, SEBI adjusted technology compliance demands based on brokers' size and technology reliance, covering areas like capacity planning and disaster recovery drills. The financial penalties structure was also modified to consider exemptions and the severity and frequency of glitches. (ANI)

(With inputs from agencies.)