SEBI To Relax Norms On Technical Glitches For Stock Brokers

The Securities and Exchange Board of India (SEBI) has proposed to ease its framework for reporting “technical glitches” at online stock brokerages to streamline errors for online trading platforms like Groww, Zerodha and Angel One. The consultation paper is open for feedback until October 12, with the new rules set to take effect from November 1, 2025.

Under the draft norms, only malfunctions directly tied to a broker’s own trading or risk management systems during market hours will qualify as reportable “technical glitches”. Outages caused by external players such as global cloud providers, payment gateways, or even disruptions in KYC onboarding will no longer count. Issues occurring outside trading hours are also excluded.

The framework will now apply only to brokers offering Internet-based trading (IBT) or securities trading using wireless technology (STWT) with more than 10,000 registered clients. SEBI estimates that about 457 smaller brokers will exit the ambit of the rules.

At the same time, the market regulator is also standardising the reporting process. In this, the brokerage which suffered the glitch must notify the SEBI and its clients within two hours of a glitch and report the incident to the stock exchange by the next day. Consequently, the root cause analysis of the issue should be submitted to the stock exchanges within 14 days. 

All filings will flow through the recently launched Samuhik Prativedan Manch portal, while exchanges will be required to publish incident details, adding transparency for investors.

Technical Glitch Issues With Brokerages

With the growing number of traders using discount brokerage platforms, Indian brokerages often face mounting pressures to curtail tech glitches to avoid outrage. Sector leader companies like Groww, Zerodha and Angel One have each faced multiple outages in recent years, drawing regulatory attention.

For instance, Zerodha encountered a technical disruption that affected live price feeds on its app Kite earlier this month. The SEBI hasn’t taken action against the issue as of yet. 

Meanwhile, IPO-bound Groww settled a case pertaining to technical glitches with SEBI by paying INR 34.1 Lakh earlier this year. The case originated from a technical glitch that Groww’s brokerage platform faced on January 23, 2024. 

Angel One was also slapped with an INR 6 Lakh file in November 2024 owed to technical glitches and inadequate oversight of its authorised persons.