The Securities and Exchange Board of India (Sebi) on Friday announced a series of measures aimed at creating a more conducive regulatory environment by enhancing ease of compliance and facilitating ease of doing business for market intermediaries. As part of this initiative, the regulator has reviewed and revised the existing technical glitch framework applicable to stock brokers.

In a release, Sebi said the changes were finalised following public consultation and after considering feedback and views from various stakeholders. The revised framework has been aligned with the objective of simplifying compliance requirements for stock brokers.

Eligibility criteria streamlined

Sebi has streamlined the eligibility criteria for the applicability of the technical glitch framework to exclude smaller stock brokers, particularly those with limited business size and lower dependence on technology. Under the revised norms, the framework will now apply only to stock brokers with more than 10,000 registered clients.

As a result of the new eligibility threshold, around 60% of stock brokers will move out of the framework, significantly reducing their overall compliance burden.

Exemptions for certain technical glitches

The revised framework also introduces specific exemptions from the applicability of technical glitch-related compliance. Glitches occurring outside a stock broker’s trading architecture, those that do not directly impact trading functionality, and incidents with negligible effect have been excluded from the framework.

The regulator said this move provides immunity to stock brokers for glitches that are beyond their control and do not affect their ability to deliver seamless services to clients.

Reporting requirements simplified

To further ease compliance, Sebi has simplified reporting requirements for technical glitches. The reporting timeline has been extended from one hour to two hours, with due consideration given to trading holidays while submitting reports.

In addition, the reporting process has been streamlined by shifting from multiple exchange-level reporting to a single reporting platform.

Technology norms rationalised

The regulator has also rationalised technology-related compliance requirements based on the size of stock brokers and their level of technology dependence. This includes easing norms related to capacity planning and disaster recovery (DR) drills, making them more cost-effective.

Disincentive structure rationalised

Sebi has rationalised the financial disincentive structure under the revised framework by factoring in exemptions, the nature of glitches—classified as major or minor—and the frequency of their occurrence. The detailed disincentive structure will be issued by stock exchanges.

electronic trading systems

Sebi revises norms to address technical glitches in stock brokers’ electronic trading systems