The Securities and Exchange Board of India (SEBI), in a circular dated December 30, has taken specific steps to protect investors’ interests during the technological disruptions and failures of stockbrokers.

According to the notice, the stock exchanges have been instructed to establish an Investor Risk Reduction Access (IRRA) facility on the joint platform, allowing investors to close or close open positions and/or cancel pending orders broker-side interruption of trading services.

Brokers can trigger this facility by requesting exchanges to enable the IRRA facility when they experience technical failures. Alternatively, stock exchanges could also step in and activate the IRRA facility by monitoring several parameters (e.g., connectivity, order flow, social media posts, etc.). The stock exchange can trigger the facility without the broker asking for it.

Once the service is enabled, the exchanges will notify broker clients of the availability of the IRRA service via text messages, emails, and by posting announcements on their respective websites.

Once logged into the IRRA service, investors can only close or liquidate open positions across sectors and exchanges. In addition, investors can also cancel pending orders. The notice clearly states that under the IRRA system, actions that increase investor risk are not allowed.

Under the IRRA facility, brokers will be granted access to management terminals to monitor investor behaviour, close their clients’ open positions, or liquidate them accordingly.

The market regulator has directed stock exchanges to establish IRRA facilities by October 1, 2023.