Sebi expects to make Investor Risk Reduction Access Platform available next fiscal

Sebi on Tuesday said an Investor Risk Reduction Access Platform will be introduced to protect investors in case there are disruptions in trading services provided by a stock broker.

''The Investor Risk Reduction Access Platform is expected to be available from the third quarter of FY 2023-24,'' the regulator said after its board meeting where the proposal was approved.

The watchdog said that in the event of disruption of trading services provided by a broker, clients face significant risk if they are unable to square off their open positions and/ or cancel orders pending at the stock exchange, particularly when the markets are volatile.

''To provide such clients a facility to reduce the risk of open positions/ pending orders during periods of disruption in services of their broker, it has been decided that stock exchanges shall introduce an Investor Risk Reduction Access Platform,'' Sebi said in a release.

A circular will be issued for the detailed framework for the platform.

Sebi's board on Tuesday also approved enhanced risk management framework for stock brokers designated as Qualified Stock Brokers (QSBs).

Certain stock brokers handle a very large number of clients, large amount of client funds and large trading volumes.

Possible failure of such brokers has the potential to cause widespread impact on investors and reputational damage to the Indian securities market, the release said.

To mitigate this risk, the board has approved amendments to the Sebi (Stock Brokers) Regulations, 1992 to designate such stock brokers, based on identified parameters, as QSBs.

''QSBs would need to comply with enhanced risk management practices/ requirements. There would also be enhanced monitoring of such QSBs by Sebi/ Market Infrastructure Institutions (MIIs),'' Sebi said.