A risk-reduction framework and platform to protect retail investors in case of technical glitches at the stock broker’s end will be created, SEBI Chairperson Madhabi Puri Buch said. But on the flip side, Buch said the regulator will not entertain any claims of loss to clients due to tech failure at the broker’s end.

“We also worry about cyber-security and technical disruptions when frameworks of large brokers with dated technology do not hold up under pressure. During market volatility, it leaves investors vulnerable and we are keen on protecting them from such disruptions,” she said. “But we will not encourage claims of losses of any kind — real or imaginary,” Buch declared.

Market experts are of the view that Buch has made confusing statements, but one should wait for the framework to be announced for more clarity.

Broadly, exchanges will introduce risk-reduction platforms that provide clients with facility to cut open positions or pending orders during a technical glitch. The facility would involve giving clients direct access to cancel or close their orders on exchanges only when the broker’s systems suffer a breakdown. It can be triggered by a broker or on suo moto basis by the exchange. The facility will be available sometime in 2024.

Qualified brokers

SEBI would announce a special class of stock brokers, who will be called qualified brokers. The first batch would be of 60 such brokers who fit the criteria, Buch said. SEBI also said it would announce a framework for issuances of yellow bonds and blue bonds by companies pertaining to solar energy and marine and water management respectively.  

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