CIRCULAR
HO/38/44/12(1)2026-MIRSD-TPD1 January 09, 2026
To
All recognized Stock Exchanges
All Registered Stock Brokers through Recognized Stock Exchanges
Dear Sir/ Madam,
Sub: - Review of Framework to address the ‘technical glitches’ in Stock Brokers’
Electronic Trading Systems’
1. SEBI vide Circular No. SEBI/HO/MIRSD/TPD-1/P/CIR/2022/160 dated
November 25, 2022 laid down a comprehensive framework to address the technical
glitches in stock brokers’ electronic trading systems. Subsequently, Stock Exchanges
also issued detailed guidelines in this regard on December 16, 2022.
2. SEBI received several representations from the various stakeholders and
Industry forum regarding need to review the present framework on Technical glitches.
Based on the representation received and the analysis of the technical glitch data, a
public consultation paper was prepared and disseminated on SEBI website to obtain
views from all the stakeholders. A views/feedback obtained on a consultation paper
was analysed and discussed with stakeholders.
3. The extant technical glitch framework for the stock brokers is thus modified.
The modification is carried out based on the following broad principles:
3.1 Ease of compliance: The eligibility criteria has been streamlined to
exclude smaller size stock brokers from the technical glitch framework to
reduce overall compliance of such stock brokers.
3.2 Exemptions from applicability: The technical glitches which are outside
the stock brokers’ trading architecture, glitches that don’t directly affect the
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trading functionality and those which have negligible impact have been
exempted from the technical glitch framework.
3.3 Simplifying the reporting requirement: Extension of time for reporting of
technical glitches (from one hour to two hours), consideration of trading
holiday’s while submitting reports and streamlining the reporting requirement
from reporting to all the exchanges to a single reporting platform (i.e.
Common Reporting Platform)
3.4 Rationalised and cost effective based technology requirements: The
requirements for the capacity planning, software testing and DR drill have
been rationalised based on the size of the stock brokers & their technology
dependency.
3.5 Rationalisation in disincentive structure: The financial disincentive
structure has been rationalised considering the exemptions, type of glitches
(major or minor) and the frequency of the occurrences.
4. The revised framework for Technical glitch is as under.
5. Definition of Technical Glitch:
5.1 “Technical glitch shall mean any malfunction in the electronic system of stock
broker, including malfunction in its hardware, software, networks/bandwidth,
processes or products or services, directly or indirectly related to trading and
risk management, occurred during trading session of stock exchange. The
malfunction in the systems of stock brokers or the one outsourced from any
third parties, which may lead to either stoppage, slowing down or variance in
the trading and risk management functions such as log-in, order placement
(including modification, cancelation, execution, confirmation, status),
allocation and viewing of margin/ collateral/ funds etc., for a contiguous
period of five minutes or more.”
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5.2 The above definition of technical glitches is subject to the condition that the
following types of technical issues in the system of stock brokers shall not be
considered as technical glitches irrespective of the time of occurrence and
accordingly need not be reported to Exchanges;
i. Technical glitches occurred due to global issues such as malfunction or
technical disruption at the cloud service providers or any other global
technology provider or any technical issue causing widespread
disruption
ii. Technology disruption due to technical issues at MII
iii. Technological glitches observed while processing of new trading
account (KYC process)
iv. Technical issues at the Back-office which does not impact the trading
and settlement of the clients
v. The failure of payment gateway applications due to technical issues
exist at banks or at the service provider or at payment aggregators end.
vi. Technical issues observed in the decision support tools such as
technical charts, profit and loss statements, back office reports etc.”
5.3 Exchanges have introduced financial disincentive structure for occurrence of
technical glitches. In this context, financial disincentive structure shall not be
applicable for the technical glitches which do not affect the stock broker's
ability to provide seamless services to their clients. In case of the following
types of technical glitches, the financial disincentive structure shall not be
applicable:
 A technical glitch that occurred one of two modes of trading (i.e either
in the mobile-based trading application or in the web-based trading
application) while other mode of the trading is functioning in proper
manner
 A technical glitch that is minor in nature or has a minor impact on the
seamless operations of the stock brokers.
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Stock exchanges shall issue detailed guidelines in this regard in
consultation with SEBI.
6. Applicability of framework:
6.1 The framework shall be applicable to the stock brokers providing IBT/STWT
trading platforms and having more than 10,000 registered clients (excluding
closed accounts) as on 31st March of previous financial year.
6.2 Stock exchange shall issue detailed guidelines in this regard and
disseminate the list of applicable stock brokers.
7. Reporting Requirements:
7.1 Stock brokers shall inform regarding the technical glitch to the stock
exchanges and also to their clients within 2 hours from the time of occurrence
of the glitch. Exchanges in turn shall disseminate the technical glitch
incidents on their website.
7.2 Stock brokers shall inform their clients regarding the occurrence of technical
glitch by disseminating information on their website and any other mode such
as SMS/email/pop-up in mobile based/ web based trading application etc.
7.3 Stock brokers shall submit a Preliminary Incident Report (as per the format
prescribed by stock exchanges) to the stock exchange within T+1 day of the
incident (T being the date of the incident). However, if T+1 day falls on a
trading holiday; submission may be done on next trading day.
7.4 Stock brokers shall submit a Root Cause Analysis Report (RCA) (as per the
format prescribed by stock exchanges) of the technical glitch to stock
exchange, within 14 working days from the date of the incident.
7.5 Stock brokers shall submit information/reports mentioned above, on
‘Samuhik Prativedan Manch’ i.e. common portal for submissions by stock
brokers.
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7.6 All technical glitches reported by stock brokers as well as independently
monitored by stock exchanges, shall be examined by the stock exchanges
for suitable actions.
8. Capacity Planning:
8.1 Increasing number of investors create additional burden on the trading
system of the stock broker and hence, adequate capacity planning is
prerequisite for stock brokers to provide continuity of services to their clients.
Stock brokers shall do capacity planning for entire trading infrastructure i.e.
server capacities, network availability, and the serving capacity of trading
applications.
8.2 Stock brokers shall monitor peak load in their trading applications, servers
and network architecture.
8.3 Stock exchanges shall issue detailed guidelines with regard to capacity
planning, peak load, and new capacity required to tackle future load on the
system of the stock brokers. The extant guidelines shall be rationalised
based on the size of the stock brokers & their technology dependency.
9. Software testing and change management
9.1 Software applications are prone to updates/changes and hence, it is
imperative for the stock brokers to ensure that all software changes that are
taking place in their applications are rigorously tested before they are used
in production systems. Software changes could impact the functioning of the
software if adequate testing is not carried out resulting technical glitches in
such software.
9.2 Stock exchanges shall issue detailed guidelines with regard to testing of
software, traceability matrix, change management process and periodic
updation of assets etc. The extant guidelines shall be rationalised based on
the size of the stock brokers & their technology dependency.
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10. Monitoring mechanism:
10.1 Proactively and independently monitoring technical glitches shall be one
of the approaches in mitigating the impact of such glitches. In this context,
Stock Exchanges have deployed API based Logging and Monitoring
Mechanism (LAMA). Stock exchanges shall continue to monitor the trading
systems of the stock brokers through this mechanism.
10.2 Stock exchanges shall review the applicable provisions of LAMA and
issue detailed guidelines with regard to applicability, key monitoring
parameters and preservation of logs etc.
11. Business Continuity Planning (BCP) and Disaster Recovery Site (DRS):
11.1 Stock Exchanges shall review the current guidelines for the applicability
of the BCP and DRS. The current guidelines shall be rationalised based on
the size of the stock brokers & their technology dependency ensuring the
following
i BCP and DRS shall not be applicable to small size stock brokers.
ii Setting up of DR site in different seismic zones
iii Frequency of DR drill and trading from DR site
iv Defining Recovery Time Objective (RTO) and Recovery Point
Objective (RPO) and defining the term “Disaster” for the
implementation of the DR.
v Requirement for the coverage of BCP-DR during the System Audit
and ISO certification requirements.
12. Stock exchanges shall rationalise and revise the current structure of the
financial disincentives considering the applicable exemption for technical
glitches, type of glitches (major or minor) and the frequency of occurrences of
the glitches.
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13. Stock exchanges shall disseminate on their websites the instances of technical
glitches occurred in the trading system of stock brokers.
14. This circular shall supersede earlier SEBI circular no SEBI/HO/MIRSD/TPD-
1/P/CIR/2022/160 dated November 25, 2022.
15. Stock exchanges shall build necessary systems for implementation of the
provisions of this circular and issue appropriate guidelines to the stock brokers
for the compliance with the provisions of this circular.
16. This circular is being issued in exercise of powers conferred under Section 11
(1) of the Securities and Exchange Board of India Act 1992 and Regulation 50
of SEBI (Stock Brokers) Regulations 2026, to protect the interests of investors
in securities and to promote the development of, and to regulate the securities
market.
17. This circular is available on SEBI website at www.sebi.gov.in under the
categories “Legal Framework” and “Circulars”.
18. This circular shall come into effect from January 09, 2026.
Yours faithfully,
Vishal M Padole
General Manager
Market Intermediaries Regulation and Supervision Department
Tel. No: 022 26449247
Email ID: vishalp@sebi.gov.in
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