SEBI Launches IRRA Platform to Enhance Investor Risk Reduction

Madhabi Puri Buch, the Chairperson of the Securities and Exchange Board of India (SEBI), has inaugurated the Investor Risk Reduction Access Platform (IRRA Platform) at the Bombay Stock Exchange (BSE). Developed under the guidance of Market Infrastructure Institutions (MIIs) overseen by SEBI, the IRRA platform aims to minimize risks encountered by investors during technical glitches at Trading Member (TM) ends, covering both primary and disaster recovery sites.

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IRRA Platform Unveiled: Enhancing Investor Protection

Launch Details

The IRRA platform underwent a soft launch on October 3, 2023, followed by its official launch on November 20, 2023. Tailored for trading members supporting Internet-based trading (IBT) and Security Trading through Wireless Technology (STWT), the platform excludes algo trading and institutional clients.

Invocation and Notifications

In the event of a technical glitch impacting a trading member’s (TM) ability to serve clients across exchanges, TMs can invoke the IRRA platform. Post-invocation, the platform downloads trades from all venues and sends SMS/email notifications to investors, providing a link for accessing the IRRA platform to review and manage their investments.

Primary Goal of IRRA

The primary objective is to safeguard investors’ funds and protect their positions. The focus is on adopting a long-term investment strategy to enhance wealth generation and counter potential losses in the futures and options (F&O) segment.

Context and Need for IRRA

The launch responds to the rising occurrences of technical issues faced by stock brokers, leading to monetary losses for clients. Recent incidents, including glitches at Zerodha and the National Stock Exchange (NSE), highlight the necessity for robust risk mitigation measures in financial markets.

Incidents Highlighting the Need

Glitches at Zerodha and the NSE underscore the imperative need for resilient risk mitigation strategies. Zerodha customers faced issues in the BSE F&O (BFO) segment in July, attributing glitches to internet service providers (ISPs). In response to the February 2021 trading halt issue, the NSE and NSE Clearing Ltd (NCL) paid Rs72.64 crore to SEBI in July 2023.

Investor Risk Reduction Access (IRRA) Platform

The Investor Risk Reduction Access (IRRA) platform is a mechanism designed to safeguard the interests of investors in the event of technical glitches or disruptions faced by trading members or stockbrokers registered with SEBI (Securities and Exchange Board of India). It acts as a safety net, enabling investors to manage their open positions and orders even when their primary broker’s services are unavailable.

Purpose

The platform serves several crucial purposes:

Protects Investors from Market Disruptions: By providing an alternative access point for trading, the IRRA platform helps to mitigate the impact of technical glitches or disruptions that could otherwise leave investors stranded and unable to manage their portfolios.
Maintains Market Order and Stability: By enabling investors to continue trading even during disruptions, the IRRA platform helps to maintain market order and stability, preventing panic selling or other destabilizing behavior.
Enhances Investor Confidence: The IRRA platform acts as a confidence-building measure for investors, assuring them that their investments are protected even in the face of unforeseen disruptions.

How the IRRA Platform Works

The IRRA platform is activated when a trading member experiences a technical glitch or disruption that renders their trading services unavailable. Upon activation, the platform performs the following steps:

Downloads Trades: The platform retrieves the investor’s trade data from the affected trading member’s systems.
Sends Notifications: Investors receive SMS and email notifications informing them of the disruption and providing a link to access the platform.
Provides Access to Trading: Investors can log in to the platform using their existing trading credentials and access their portfolio information, open positions, and pending orders.
Enables Order Management: Investors can place orders to square off or close open positions, cancel pending orders, and monitor their portfolio status.

Benefits of the IRRA Platform

The platform offers several key benefits to investors:

Real-Time Access to Portfolio: Investors can access their portfolio information even when their primary broker’s services are unavailable.
Protection from Market Volatility: Investors can manage their open positions and orders to prevent losses due to market volatility during a disruption.
Enhanced Control over Investments: Investors retain control over their investments and can make informed decisions even during disruptions.
Peace of Mind: Investors can have peace of mind knowing that their investments are protected and that they can take action to manage their portfolios during disruptions.

Conclusion

The Investor Risk Reduction Access (IRRA) platform plays a vital role in safeguarding investor interests and maintaining market stability. By providing an alternative access point for trading and enabling investors to manage their portfolios during disruptions, the IRRA platform contributes to a more resilient and investor-friendly market environment.

Shubham Mittal

Shubham Mittal is a renowned current affairs writer and expert in government exam preparation, inspiring readers with insightful articles and guiding aspirants with his expertise.

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