SEBI has issued an updated framework for handling technical outages on broker trading platforms. It replaces the November 2022 rules after reviewing outage data and industry feedback, and is effective from 9 January 2026. You can find the full circular here.
The updated framework focuses on five things.
- Reduce compliance for smaller brokers.
- Exclude issues that are outside a broker’s control or have minimal impact.
- Simplifying outage reporting.
- Scaling tech and disaster recovery requirements based on broker size.
- Making penalties depend on how serious and how often glitches happen.
This framework applies to stock brokers who:
• Provide online trading platforms, such as web or mobile apps.
• Have more than 10,000 registered clients as of 31 March of the previous financial year.
The exchanges will publish the list of brokers to whom this framework applies.
What is a technical glitch?
SEBI defines a technical glitch as any malfunction in a stock broker’s electronic systems that is directly or indirectly related to trading or risk management and lasts for five minutes or more during trading hours.
This includes failures in:
- Login
- Order placing, modifying, cancelling, or execution
- Order confirmation or status
- Viewing funds, margins, or collateral
- Risk management and allocation systems
What does not count as a technical glitch?
- Global cloud or technology provider failures.
- Exchange or clearing corporation system issues.
- Issues during new account opening or KYC processing.
- Back office issues that do not affect trading or settlement.
- Failures at banks, payment gateways, or payment aggregators.
- Issues in charts, profit and loss, or other decision support tools.
Instances where financial disincentives will not apply
- One of the trading channels, mobile or web, is affected while the other is working.
- The glitch is minor and does not materially affect seamless trading.
The exchanges will define how minor and major glitches are classified.
Reporting timeline
- Within two hours of a technical glitch, the broker must notify the stock exchanges.
- The broker must inform clients through its website and channels such as email SMS or in app notifications.
- The exchanges will publish the incident on their websites.
Reporting requirements
Brokers must submit two reports through the common reporting portal called Samuhik Prativedan Manch.
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A preliminary incident report by T+1 day where T is the date of the incident. If T+1 is a trading holiday it moves to the next trading day.
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Root cause analysis to be submitted within 14 working days from the date of the incident, along with details of the cause and corrective actions.
System capacity and tech controls
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Brokers are expected to run systems that can handle their client load. That means planning for peak traffic across servers networks and trading apps.
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All software changes must be tested before being rolled out, and proper controls must be in place to prevent faulty updates from affecting trading.
The exchanges will issue guidelines based on broker size and technology use.
Exchange level monitoring
The exchanges run an API based monitoring system called LAMA that tracks broker platforms in real time. This will continue, with exchanges defining logging and data retention norms.
Business continuity and disaster recovery
Business continuity and disaster recovery (BCP and DRS) rules will depend on the size of the broker. Smaller brokers will not be required to keep separate disaster recovery sites.
Larger brokers will need backup sites in different seismic zones, run regular drills, and meet set limits for system recovery and data loss.
Penalties and public disclosure
The penalty structure will be revised based on the type of glitch and how often it occurs. The exchanges will also publish all broker outages on their websites.
