SEBI asks bourses, clearing corporations to set up Investor Risk Reduction Access platform by October next

Markets watchdog SEBI on Friday asked stock exchanges and clearing corporations to put in place a platform to help investors in case there is a disruption of services caused by systems beloging to trading members.

After extensive consultations, the regulator has decided to introduce the Investor Risk Reduction Access (IRRA) platform and time has been given till October 1 next year to make the platform operational.

The move comes against the backdrop of a rise in instances of glitches in Trading Members’ (TMs) systems. In such cases, investors with open positions are at risk of the non-availability of avenues to close their positions, particularly if markets are volatile.

A joint platform to provide IRRA service will be developed by the exchanges to provide the investors with an opportunity to square off/close the open positions and/or cancel pending orders in case of disruption of trading services provided by the TM.

In a circular on Friday, SEBI said the IRRA service would support multiple segments across multiple exchanges.

“TMs, upon facing technical glitches, which lead to disruption of trading services, can request for enablement of the IRRA service as per the procedures specified by the stock exchanges from time to time and IRRA shall be enabled on receipt of such requests,” it said.

According to the regulator, exchanges should enable the service suo-moto only if there was disruption of the trading services of a TM across all the exchanges, where the TM is a member.

“In case of disruption of trading services of TM with one/some of the exchanges, where the TM is member, TM may request the enablement, in which case trading member shall use the service for all the exchanges,” the circular said.

Once IRRA service is authorised, the investors concerned can square off/close the open positions across segments and exchange/s and/or cancel the orders across segments, which are pending at the exchange/s.

Once the TM’s system is revived, then reverse migration from the IRRA system will be done.

“Upon revival of the TM’s trading system, TM shall update their systems taking data from the exchanges thus ensuring that latest status of orders and trades is available to the investors,” the regulator said in the circular.

SEBI noted that the stock exchanges should ensure credible and periodic testing of the IRRA platform is carried out from time to time for the smooth functioning of the service.

“In case of disruptions after the cut-off time for enablement of IRRA service, exchanges, based on their assessment and in consultation with SEBI, may extend the market hours, if needed,” it added.