SEBI Proposes Major Easing of Stock Broker Technical Glitch Regulations

Market regulators finally acknowledge what traders have known for years—technical failures are the system's feature, not a bug.

The Compliance Shift

SEBI's new framework scraps punitive measures for routine platform outages, recognizing that in today's hyper-speed markets, even nanosecond delays can trigger cascading failures. The proposal eliminates automatic penalties for brief connectivity drops—a move that acknowledges the impossible standards brokers face when infrastructure fails faster than humans can react.

The Glitch Economy

Brokers can now breathe easier during system maintenance windows and unexpected server crashes. The revised rules create tiered response protocols instead of one-size-fits-all punishments, effectively admitting that perfect uptime is a fantasy in complex trading ecosystems. Meanwhile, retail investors continue praying their limit orders survive the next API hiccup.

Because nothing says 'market integrity' like codifying acceptable failure rates—Wall Street's been doing it for decades, just without the paperwork.

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SEBI likely to further ease technical glitch norms for brokers

The revised framework WOULD apply only to brokers offering internet-based and securities trading through wireless technology (IBT/STWT) platforms and having more than 10,000 clients as of March 31 of the previous financial year. This would exclude around 457 smaller stock brokers from the ambit of the framework.

“This will result in ease of compliance for such stock brokers, considering their low clientele base and relatively less technology dominance in their trading services,” SEBI said in a draft paper on Monday. .

Public comments on the proposals have been invited until October 12.

Centralised portal

To enhance transparency and cut duplication, the regulator has proposed centralising glitch reporting through a single portal. Brokers would be required to inform both exchanges and their clients within two hours of any incident, while exchanges would, in turn, disclose the details on their websites.

Brokers would also be required to update clients through their own websites, SMS, emails, or pop-up alerts. In addition, they would need to submit a preliminary incident report to the exchange by the next trading day (T+1) and submit a detailed root cause analysis within 14 calendar days. Both reports would be routed through a new common portal called Samuhik Prativedan Manch.

The MOVE follows concerns raised by industry participants over the regulation’s scope and rigidity. The earlier framework on technical glitches was rolled out in November 2022, with detailed guidelines issued by exchanges the following month.

Published on September 22, 2025