IRRA platform

An investor's only route to the exchange is a trading member. If the broker's systems go down in the middle of a volatile day, the investor is locked out: open positions keep moving, pending orders may still trade, and there is no way to act.

SEBI's answer, set out in a circular summarised in Chapter 6, is Investor Risk Reduction Access (IRRA). The exchanges have jointly developed a platform that gives investors an opportunity to square off or close open positions and cancel pending orders when the trading member's services are disrupted.

The name carries the rule. It is for reducing risk, and only that. The IRRA service shall not permit any action that increases the risk of the investor, so no new positions can be opened through it. And it is exclusively for individual investors — not for algorithmic trading or institutional clients.

How IRRA works (Chapter 6, section 6.4.2):

1. A trading member facing a technical glitch that disrupts its trading services requests the exchanges to enable IRRA, following the exchanges' procedures.
2. On that request, IRRA is enabled.
3. The exchange informs all the TM's investors by email/SMS and a public notice on its website; the TM also displays it on its own website.
4. Investors use IRRA to square off or close positions and/or cancel pending orders. Nothing that increases risk is permitted.
5. The TM gets an Admin Terminal to monitor investors' actions and to carry out the same actions on investors' instructions.

Scope. The service supports multiple segments across multiple exchanges. It serves individual investors only, not algorithmic trading or institutional clients.

The TM's own obligations after a glitch (the technical glitches framework in the same section):

MIIs report glitches through SEBI's web portal, iSPOT.

Illustrative. The investor, positions, prices and times are hypothetical; the IRRA rules are the workbook's.

Nisha holds a long position of 10 lots of USDINR futures bought at 83.00 (USD 1,000 a lot). She also has a pending buy order for 5 more lots at 82.80. At 11:20 her broker's trading app fails. The rupee is strengthening and the futures fall to 82.60.

The broker requests IRRA, the exchange enables it and Nisha receives an SMS. Through IRRA she:

• cancels the pending 5-lot buy order — allowed, it reduces risk;
• squares off her 10 lots at 82.60 — allowed.

Loss on square-off = (83.00 − 82.60) × 10 × 1,000 = Rs 4,000

If she had been stuck until the broker's systems returned at 14:30, with the price by then at 82.20:

Loss = (83.00 − 82.20) × 10 × 1,000 = Rs 8,000

IRRA cut the loss by Rs 4,000 — and the cancelled pending order, had it filled at 82.80 and been closed at 82.20, would have lost a further (82.80 − 82.20) × 5 × 1,000 = Rs 3,000.

What Nisha could not do through IRRA: buy 10 more lots at 82.60 to average down. That would increase her risk.

Chapter 6 (Trading Mechanism in Exchange Traded Currency Derivatives), section 6.4.2, summarises the SEBI circular introducing IRRA immediately after the pre-order and pre-trade checks, followed by the framework for technical glitches in stock brokers' electronic trading systems. Expect questions on what an investor may and may not do through IRRA, who requests it, how investors are informed, and whom it excludes.

• Risk-reducing actions only: square off, close, cancel pending orders. No new positions.
• Individual investors only — not algorithmic trading, not institutional clients.
• The trading member requests enablement; the exchange enables it and informs investors by email/SMS and a website notice.
• Multiple segments, multiple exchanges — it is a joint platform, not one exchange's facility.
• The TM gets an Admin Terminal to monitor and to act on investors' instructions.
• IRRA is the investor's tool; the kill switch is the member's. The kill switch cancels all of a member's outstanding orders at once.
• Glitch deadlines: 1 hour to inform the exchange, T+1 preliminary report, 14 days for the RCA.