SEBI Introduces IRRA Platform

Securities and Exchange Board of India (SEBI) on 30th December, 2022 has issues a circular vide notification no. SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2022/177 and has introduced Investor Risk Reduction Access (IRRA) platform in case of disruption of trading services provided by the Trading Member (TM) in exercise of the powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act 1992, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.

SEBI asked stock exchanges and clearing corporations to put in place a platform to give investors an opportunity to square off their position or cancel pending orders in case of disruption of trading services provided by trading members.

  • Key Highlights:

To address the issue, SEBI had extensive consultations with stock exchanges, clearing corporations (CCs) and TMs.

The following has been decided:

  • Development of the service:

A joint platform to provide Investor Risk Reduction Access (IRRA) service shall be developed by the exchanges to provide the investors an opportunity to square off/close the open positions and/or cancel pending orders in case of disruption of trading services provided by the Trading Member.

The IRRA service shall support multiple segments across multiple exchanges.

  • Enablement of IRRA service:

Trading Members (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.

This service shall be enabled by the exchanges, suo moto, only in case of disruption of trading services of TM across all the exchanges, where the TM is 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 TM shall use the service for all the exchanges.

  • Access to Investors:

Once the service is enabled, all the investors of the TM shall be informed by the exchange of the availability of the service through email/SMS and a public notice on exchanges’ website. TMs shall also communicate the same by displaying on their website.

Investors can login to the service using either the Unique Client Code (UCC) or the PAN number and they shall be authorized by a One Time Password (OTP) to be sent to their registered mobile numbers and email ids.

  • Actions on IRRA service:

Once successfully authorized, the investors 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.

The IRRA service shall not permit any action that increases the risk of the investor. The TM shall continue to be responsible for all the activities on the IRRA with respect to all obligations including settlement and margin requirements.

  • Reverse Migration to the TM’s systems:

Stock exchanges shall design a detailed framework for reverse migration from IRRA system to the TM’s trading system, as and when the TM’s trading system is revived successfully and a request is made in this regard.

Exchanges shall ensure that credible and periodic testing of the IRRA platform is carried out from time to time for smooth functioning of the service.

Stock exchanges shall issue guidelines in this regard giving details like cut-off times for enablement of IRRA service, handling of various scenarios of open positions, framework for reverse migration etc

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.

Stock exchanges and CCs shall put in place appropriate systems to ensure compliance of the provisions of this circular on or before October 01, 2023

Stock exchanges are directed to:

  • Set up the platform;
  • Bring the provisions of this circular to the notice of their members / participants and also disseminate the same on their websites;
  • Make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision;
  • Communicate to SEBI, monthly milestones as per the implementation plan and status against the milestones including, in their monthly development reports;
  • Publish detailed guidelines/ Frequently Asked Questions (FAQs).

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