Description

SEBI revises technical glitch framework for stock brokers to enhance ease of compliance, streamlining eligibility criteria to brokers with over 10,000 clients and simplifying reporting requirements.

Summary

SEBI has revised the technical glitch framework for stock brokers as part of its Ease of Compliance Initiative. The revised framework streamlines eligibility criteria to apply only to brokers with more than 10,000 registered clients, exempting approximately 60% of stock brokers from this compliance requirement. Key changes include exemptions for glitches outside brokers’ control, extended reporting timelines from one to two hours, consolidated reporting through a Common Reporting Platform, rationalized technology requirements based on broker size, and revised financial disincentive structures.

Key Points

  • Framework now applies only to stock brokers with more than 10,000 registered clients
  • Approximately 60% of stock brokers will be exempt from the technical glitch framework
  • Glitches occurring outside brokers’ trading architecture are now exempted
  • Glitches that don’t directly affect trading functionality or have negligible impact are exempted
  • Reporting time extended from one hour to two hours
  • Trading holidays now considered when submitting reports
  • Single reporting platform (Common Reporting Platform) replaces multiple exchange reporting
  • Technology compliance requirements rationalized based on broker size and technology dependency
  • Capacity planning and DR drill requirements have been rationalized
  • Financial disincentive structure revised considering exemptions, glitch types (major/minor), and frequency

Regulatory Changes

Eligibility Criteria:

  • Previous framework applied to all stock brokers
  • New framework applies only to brokers with more than 10,000 registered clients
  • Excludes smaller brokers with limited business size and lower technology dependency

Exemptions from Technical Glitch Framework:

  • Glitches occurring outside stock brokers’ trading architecture
  • Glitches that do not directly affect trading functionality
  • Glitches with negligible impact on operations

Reporting Requirements:

  • Reporting timeline extended from 1 hour to 2 hours
  • Trading holidays now factored into report submission deadlines
  • Centralized reporting through Common Reporting Platform instead of individual exchange reporting

Technology Requirements:

  • Rationalized based on broker size and technology dependency
  • Modified capacity planning requirements
  • Adjusted disaster recovery (DR) drill requirements

Disincentive Structure:

  • Financial penalties rationalized based on applicable exemptions
  • Differentiation between major and minor glitches
  • Consideration of frequency of occurrences
  • Penalties to be issued by stock exchanges

Compliance Requirements

For Stock Brokers with More Than 10,000 Registered Clients:

  • Maintain compliance with revised technical glitch framework
  • Report technical glitches within two hours of occurrence
  • Use Common Reporting Platform for all glitch reporting
  • Meet rationalized technology requirements appropriate to business size
  • Comply with revised capacity planning and DR drill requirements
  • Adhere to revised financial disincentive structure for glitches

For Stock Brokers with 10,000 or Fewer Registered Clients:

  • Exempt from technical glitch framework compliance requirements
  • Significantly reduced overall compliance burden

Important Dates

  • Circular Issue Date: January 09, 2026
  • Effective Date: Not explicitly specified in the circular; implementation details to be provided by stock exchanges

Impact Assessment

Market Impact:

  • Positive impact on approximately 60% of stock brokers who will be exempt from the framework
  • Reduced compliance costs for smaller brokers, potentially improving market participation
  • Streamlined operations for larger brokers through simplified reporting and rationalized requirements

Operational Impact:

  • Significant reduction in compliance burden for smaller stock brokers
  • Simplified reporting process through centralized Common Reporting Platform
  • Extended reporting timeline (2 hours vs 1 hour) provides operational flexibility
  • Focus on glitches within brokers’ control improves accountability framework
  • Cost-effective technology compliance requirements based on business size

Compliance Impact:

  • Clearer distinction between material and non-material glitches
  • More proportionate regulatory framework aligned with broker size and capabilities
  • Reduced administrative burden while maintaining oversight of systemically important brokers
  • Rationalized penalty structure provides fair and graduated enforcement mechanism

Impact Justification

Significant regulatory relief for stock brokers with approximately 60% of brokers moving out of the technical glitch framework, reducing compliance burden while maintaining oversight for larger brokers