Market pulse

Authored by Shrey Jain, Founder and CEO of SAS Online

In the pulsating heart of India's stock market, where dreams are woven and financial destinies are crafted, technology has redefined the very fabric of trading. But as online trading platforms have surged, so too have the complexities and challenges that beckon an industry's evolution. Within this landscape, SEBI (Securities and Exchange Board of India), the vigilant guardian of India's financial markets, has unveiled the "Investor Risk Reduction Access" Service —a move that could shield investors/traders from potential losses.

In the last one decade online trading platforms have ushered in an era of unprecedented accessibility, allowing millions of Indian investors to partake in the financial markets. Yet, beneath the veneer of modernity lurk a set of unique challenges—technical glitches that periodically plague brokerage firms. These glitches have often triggered system downtimes, leaving investors exposed to potential financial losses.

While all of the brokers as well as cloud services promise 99.99% uptime, but that 0.01 per cent error still leaves room which can make our community suffer. Today's online brokerage firms operate within the zero brokerage model and despite their unwavering commitment to maintain system integrity and operational stability, these brokers find themselves grappling with the unintended consequences of technical malfunctions.

SEBI's proposal is to empower Indian investors by granting them direct access to exchange platforms in the event of broker downtime. As industry representatives, we wholeheartedly welcome this initiative, recognizing its potential to not only instil further confidence in investors but also to mitigate systemic risks and fortify market stability.

This already started with SEBI's framework which was implemented on April 1, 2023, introducing an array of measures meticulously designed to fortify India's market infrastructure against the ever-present spectre of technological vulnerabilities. The measures brought stringent reporting prerequisites, financial disincentives aimed at brokers grappling with technical glitches, rigorous capacity planning, and meticulous software testing.

A pivotal shift introduced by SEBI mandates brokers to expediently report technical glitches and undertake exhaustive root cause analyses (RCAs) was a great way for us to prepare for this day. This information will be readily available to prospective clients, ushering in an era marked by transparency and a renewed sense of accountability.

Furthermore, brokers presiding over clientele exceeding 50,000 have been contractually obligated to establish Disaster Recovery Setups and rigorously test their efficiency. This critical setup facilitates the seamless transfer of trading operations in the wake of technical disruptions. Capacity planning, encompassing server capabilities, network resilience, and trading application prowess, assumes a central role. Now, brokers like us need to meticulously monitor peak workloads within their systems, guaranteeing that operational capacities consistently outmatch observed peak loads. Thus, making the industry foolproof for any major hiccups in future.

IRRA is a cloud-based platform developed jointly by stock exchanges to help investors square off open positions and cancel pending orders in case of technical glitches at the broker level. Brokers can invoke IRRA service in case both primary and Disaster Site are down or the same can be invoked by exchanges based on alerts from exchange monitoring of order flows, connectivity or even reports on social media wrt a particular brokerage. Investors would be able to access IRRA service via a web link or mobile app. Investors are required to keep their mobile/email updated with a broker as the same would be used to login into IRRA service via the OTP mechanism

India's high-octane online trading ecosystem, where each trading minute carries significant weight, uninterrupted access to markets becomes the cornerstone of a thriving industry. SEBI's proposal empowers Indian investors to reclaim control of their investments, even in the throes of broker system hiccups.

Article is also published in DALAL STREET INVESTEMENT JOURNAL - Click here