Sebi mulls easing rules for stock broker technical glitches; releases draft circular

The Securities and Exchange Board of India (Sebi) is looking to simplify rules for stockbrokers dealing with technical glitches on their online trading platforms. The regulator has released a draft consultation paper and invited feedback from the public by October 12, 2025.

Under the proposed changes, the definition of a “technical glitch” would exclude problems that happen after trading hours or those beyond a broker’s control. “The definition of technical glitch 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,” the capital market regulator said in a draft paper released on September 22.

In its consultation paper, the regulator underlined that the rules would apply only to brokers offering IBT/STWT platforms with more than 10,000 registered clients, meaning around 457 smaller brokers would no longer fall under this framework. IBT (internet-based trading) allows clients to trade directly via the internet, while STWT (screen-based trading workstation) refers to advanced trading terminals used by brokers to execute trades on behalf of clients.

“The framework will be applicable to stock brokers providing IBT/STWT trading platforms and having more than 10,000 registered clients as on 31st March of the previous financial year,” it said.

This move is expected to reduce compliance pressure on smaller players, who handle fewer clients and have relatively less technology dominance in their trading services, the regulator said.

Sebi also plans to simplify reporting requirements. Brokers would submit glitch reports via a common reporting platform, avoiding multiple filings and allowing reasonable time for reporting, including during trading holidays.

“Rationalisation of reporting of technical glitches to the Stock Exchange is proposed to be eased, considering the reasonable time required to report and trading holidays. Further, reporting is proposed to be done via a common reporting platform to avoid multiple filings by stock brokers,” it said.

The draft comes after Sebi received feedback from exchanges, industry forums, and market participants, highlighting the need to review and streamline the existing framework. The proposed changes aim to clarify definitions, rationalise penalties, and make compliance more practical, while ensuring investors remain protected.

Sebi has invited stakeholders to share their comments before the October 12 deadline.