SEBI Narrows Technical Glitch Rules: 60% of Brokers Exempt, Reporting Time Doubled

Moneylife Digital Team 09 January 2026

Investor Interest

Market regulator Securities and Exchange Board of India (SEBI) has significantly relaxed its technical glitch framework for stock brokers, exempting nearly 60% of intermediaries from its ambit, extending reporting timelines, narrowing the definition of reportable glitches and rationalising penalties. The revised framework will now apply only to brokers with more than 10,000 registered clients, sharply reducing compliance obligations for smaller players.

The changes follow a public consultation process and are part of SEBI’s broader push towards proportional regulation and ease of doing business, while retaining safeguards for market integrity, the market regulator says in a release.

A key change is the revised eligibility threshold, under which only stock brokers with over 10,000 clients will be covered. This effectively removes smaller brokers, many of whom have limited technology dependence, from the framework. SEBI says this alone will take around 60% of brokers out of the compliance net.

SEBI has also narrowed the scope of what qualifies as a reportable technical glitch. Under the revised norms, glitches that occur outside a broker’s trading architecture, do not directly impact trading, or have a negligible effect, will be excluded. This shields brokers from regulatory action for incidents beyond their control or those that do not affect client trading.

In another relief measure, SEBI has simplified the reporting requirements for glitches. The reporting timeline has been extended from one hour to two hours, and trading holidays will now be taken into account when calculating reporting deadlines. Further, brokers will no longer need to report glitches separately to multiple stock exchanges. Instead, disclosures will be made through a single common reporting platform (CRP), reducing duplication and operational friction.

The regulator has also rationalised technology and infrastructure norms, including requirements related to capacity planning and disaster recovery drills. These obligations will now be aligned with the size of the broker and its reliance on technology, making compliance more cost-effective.

Additionally, SEBI has reworked the financial disincentive framework linked to technical glitches. Penalties will now consider exemptions, the severity of the glitch, classified as major or minor, and the frequency of such incidents. Stock exchanges will issue detailed guidelines on how these disincentives will be applied.

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