The Securities and Exchange Board of India (“SEBI”) vide its circular bearing no. SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2022/177 dated December 30, 2022 has introduced Investor Risk Reduction Access (IRRA) platform in case of disruption of trading services provided by the Trading Member (“TM”). This circular is to be complied with by October 1, 2023. In this regard, the following has been decided:

1. Development

This IRRA Service is to be developed as a joint platform by the exchanges, to allow investors to have a means of closing off their positions in case of disruption of trading services provided by TM. It shall be developed in a manner that allows it to support multiple segments across several exchanges. It shall also be the responsibility of the exchanges to ensure that the IRRA platform is tested on a periodic basis to ensure smooth functioning. They shall also issue guidelines pertaining to the operation of the IRRA service.

2. Enablement

The TMs can request for the enablement of IRRA services upon facing disruption according to the procedure as may be specified by the exchanges. Additionally, the exchanges may also suo moto enable IRRA services if the monitoring of the TM’s connectivity, order flow, etc. reveals that it is needed; however, this may only be done if there is disruption of trading services of TM across all the exchanges.

3. Access to Investors

Once the service is enabled, the investors shall be intimated of the IRRA service by the exchange via e-mail/ SMS and public notice. The investors may then login through either the Unique Client Code (UCC) or the PAN number and they shall be authorized through an OTP received to their registered mobile number and e-mail.

4. Actions

The IRRA service shall allow the investors to square off/ close the open positions and/ or cancel the orders which are pending. The TM shall also be able to carry out the actions mentioned aforesaid on instruction from the investors through an Admin Terminal. The TM shall continue to be responsible with respect to all obligations arising out of transactions undertaken through this service.

5. Reverse Migration

A comprehensive mechanism for reverse migration back to the TM’s system must be established by the stock exchanges. Additionally, the TM must update their systems upon revival to ensure that an up-to-date record of trades is available. This circular directs stock exchanges to establish the platform, intimate members about the circular, make amendments to bye-laws and rules, maintain communication with the SEBI and publish guidelines or FAQs pertaining to the same, if required.

Please find attached a copy of the Amendment Rules.

This update has been contributed by Ankit Guha (Partner) and Shubhangi Gupta (Associate).

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