Investor Risk Reduction Access Platform

In recent years, there has been a rise in instances of technological glitches in the securities market, leading to disruption of trading services and investor complaints. In order to provide investors with a means to mitigate the risk of such disruptions, the Securities and Exchange Board of India (SEBI) has directed stock exchanges to set up an Investor Risk Reduction Access (IRRA) platform.

  • The IRRA platform will allow investors to square off their positions or cancel pending orders in the event of a disruption of trading services provided by a trading member.

SEBI's Directive on the IRRA Platform:

  • According to SEBI's circular, the IRRA platform will be a joint service developed by the stock exchanges to provide investors with the ability to close their open positions and/or cancel pending orders in case of a disruption of trading services provided by a trading member. I
  • n the event of a technical glitch leading to a disruption of trading services, the trading member may request for the enablement of the IRRA service.
  • SEBI has also directed the stock exchanges to monitor parameters such as connectivity, order flow, and social media posts, and to suo moto initiate the enablement of the IRRA service if necessary, irrespective of any request by the trading member.

Responsibility of Trading Members:

  • SEBI has stated that the trading member will continue to be responsible for all activities on the IRRA platform with respect to all obligations, including settlement and margin requirements.
  • In addition, the stock exchanges will be required to design a framework for reverse migration from the IRRA system to the trading member's system, once the trading system has been successfully revived and a request is made in this regard.

Implementation and Testing of the IRRA Platform:

  • SEBI has directed the stock exchanges and clearing corporations to put in place appropriate systems for the IRRA platform by October 1, 2023.
  • It has also instructed the stock exchanges to conduct credible and periodic testing of the IRRA platform to ensure its smooth functioning.

The IRRA platform is a welcome move by SEBI to provide investors with a means to mitigate the risk of disruptions in trading services due to technological glitches. By allowing investors to square off their positions or cancel pending orders in such circumstances, the IRRA platform will help to reduce the risk of financial losses for investors and increase confidence in the securities market. The implementation and testing of the IRRA platform by the stock exchanges will be crucial in ensuring its smooth functioning and effectiveness in protecting the interests of investors.

Written by IAS POINT

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