Framework to Address Technical Glitches in Broker Trading Systems — What's Required

SEBI has prescribed a comprehensive framework to address technical glitches in stock brokers' electronic trading systems, including reporting requirements, capacity planning, and software testing obligations. The framework, initially introduced through SEBI Circular SEBI/HO/MIRSD/TPD-1/P/CIR/2022/160 dated November 25, 2022, was revised in January 2026 to ease compliance burden. This article explains what is required and the recent revisions to the framework.

Definition of Technical Glitch

Technical glitch shall mean any malfunction in the systems of stock broker including malfunction in its hardware, software, networks, processes or any products or services provided by the stock broker in the electronic form. The malfunction can be on account of inadequate Infrastructure / systems, cyber-attacks / incidents, procedural errors and omissions, or process failures or otherwise, in their own systems or the one outsourced from any third parties, which may lead to either stoppage, slowing down or variance in the normal functions / operations / services of systems of the stock broker for a contiguous period of five minutes or more.

Reporting Requirements

Initial Reporting (Within 2 Hours)

Stock brokers shall inform about the technical glitch to the stock exchanges immediately but not later than 2 hours from the time of occurrence of the glitch. Exchanges in turn shall disseminate the technical glitch incidents on their website.

Preliminary Incident Report (T+1 Day)

Stock brokers shall submit a Preliminary Incident Report to the Exchange within T+1 day of the incident (T being the date of the incident). The report shall include the date and time of the incident, the details of the incident, effect of the incident and the immediate action taken to rectify the problem.

Root Cause Analysis (RCA) Report (T+14 Days)

Stock brokers shall submit a Root Cause Analysis (RCA) Report of the technical glitch to stock exchange, within 14 days from the date of the incident. The RCA report shall, inter-alia, include:

• Time of incident.
• Cause of the technical glitch (including root cause from vendor(s), if applicable).
• Duration.
• Chronology of events.
• Impact analysis.
• Details of corrective / preventive measures taken (or to be taken).
• Restoration of operations, etc.

Common Reporting Platform

Stock brokers shall submit information through a common reporting platform (Samuhik Prativedan Manch) instead of reporting to each exchange separately.

Capacity Planning

• Stock brokers shall do capacity planning for entire trading infrastructure i.e. server capacities, network availability, and the serving capacity of trading applications.
• The installed capacity shall be at least 1.5 times of the observed peak load.
• Stock brokers shall deploy adequate monitoring mechanisms to get timely alerts on current utilization going beyond permissible limit of 70% of its installed capacity.

Software Testing and Change Management

• Stock brokers shall create test driven environments for all types of software developed by them or their vendors.
• Regression testing, security testing and unit testing shall be included in the software development, deployment and operations practices.
• Stock Brokers shall prepare a traceability matrix between functionalities and unit tests.
• Stock brokers shall implement a change management process to avoid any risk arising due to unplanned and unauthorized changes.
• Stock brokers shall periodically update all their assets including Servers, OS, databases, middleware, network devices, firewalls, IDS / IPS desktops etc. with latest applicable versions and patches.

Business Continuity Planning and Disaster Recovery

• Stock brokers with a minimum client base shall mandatorily establish business continuity / DR set up.
• Stock brokers shall put in place a comprehensive BCP-DR policy document.
• The DRS shall preferably be set up in different seismic zones.
• Specified stock brokers shall conduct DR drills / live trading from DR site for at least 1 full trading day.

Recent Revisions (January 2026)

The framework was revised with effect from January 9, 2026, based on the following principles:

• Ease of Compliance: Eligibility criteria streamlined to exclude smaller size stock brokers.
• Exemptions: Technical glitches outside brokers' trading architecture or with negligible impact are exempted.
• Simplified Reporting: Reporting time extended from one hour to two hours; common reporting platform introduced.
• Rationalised Technology Requirements: Capacity planning, software testing, and DR drill requirements rationalised based on broker size.
• Rationalised Disincentive Structure: Financial disincentives revised considering exemptions, type of glitches, and frequency.

How We Help

At Anuj Desai & Associates, we help stock brokers understand the technical glitch framework, implement required systems, and ensure compliance with reporting requirements. If you need assistance with technical glitch compliance, reach out to our regulatory compliance desk.