Technical glitch
A malfunction in a stock broker's electronic trading or risk systems during market hours that stops, slows or distorts functions like log-in or order placement for five minutes or more.
In plain language
When a broker's app freezes at 10 a.m. and clients cannot log in or exit positions, that is more than an inconvenience. SEBI treats it as a technical glitch, with fixed reporting duties.
The workbook defines a technical glitch as any malfunction in the electronic system of a stock broker, including hardware, software, networks/bandwidth, processes, products or services, directly or indirectly related to trading and risk management, occurring during a stock exchange trading session. It covers the broker's own systems and outsourced ones. It must cause stoppage, slowdown or variance in functions such as log-in, order placement (modification, cancellation, execution, confirmation, status) and viewing or allocating margin, collateral or funds, for a contiguous period of five minutes or more. SEBI has also specified certain issues that are not treated as glitches.
How it works
The SEBI framework for stock brokers' electronic trading systems (Chapter 3, section 3.4.5.2)
| Rule | Workbook figure |
|---|---|
| Who it applies to | Brokers providing IBT/STWT trading with more than 10,000 registered clients (excluding closed accounts) as on 31st March of the previous financial year |
| Minimum duration | 5 minutes or more, contiguous |
| Inform exchanges and clients | Within 2 hours of the glitch |
| Preliminary Incident Report to exchange | Within T+1 day (T = date of incident) |
| Root Cause Analysis report | Within 14 days of the incident, in SEBI's format |
Also in the framework: exchanges' financial disincentives do not apply to glitches that do not affect the broker's ability to serve clients; brokers must plan capacity for growing client numbers; and exchanges have built an API-based Logging and Monitoring Mechanism (LAMA) through which specified brokers monitor key system parameters.
The wider continuity toolkit
- Chapter 3 lists technology risk, which includes technical glitches and cyber-attacks, among the risks a broker must manage.
- SEBI's circular dated March 27, 2026 discontinued the Investor Risk Reduction Access (IRRA) platform, because exchanges provide a Contingency Pool Trading facility on which brokers can square off clients' open positions during disruptions.
- For exchange outages, NSE and BSE act as alternative venues: the affected exchange notifies SEBI and the other venue within 75 minutes, and the backup exchange activates its BCP within 15 minutes of that intimation. A SOP of January 9, 2023 covers outage handling and extension of trading hours.
A worked example
Broker names, client counts and times are illustrative; the thresholds and deadlines are the workbook's.
Broker P offers internet trading and had 2,50,000 registered clients on 31 March. On Tuesday, 10 March, its order-placement service fails from 10:05 a.m. to 10:12 a.m., 7 minutes.
- 7 minutes is at least 5 contiguous minutes, so this is a technical glitch under the framework.
- Inform the exchange and clients: within 2 hours of 10:05 a.m., i.e. by 12:05 p.m.
- Preliminary Incident Report: by Wednesday, 11 March (T+1).
- Root Cause Analysis report: within 14 days of 10 March, i.e. by 24 March.
Broker Q also offers internet trading but has 8,000 registered clients. The same outage would fall outside this framework, which applies only above 10,000 clients.
Broker P again, next week: a 4-minute slowdown in margin display. It does not meet the five-minute test.
Why NISM asks about it
Chapter 3, section 3.4.5.2 (Handling of Technical Glitches) carries the definition, the 10,000-client applicability, the 2-hour, T+1 and 14-day deadlines, LAMA, the Contingency Pool Trading facility that replaced IRRA and the 75-minute/15-minute rules for exchange outages. Section 3.3.1.2 (Types of Risk for Members) lists technology risk. These deadlines are ideal multiple-choice material; expect a question that swaps 2 hours, T+1 and 14 days.
Common exam traps
- Five minutes or more, contiguous, and during a trading session. Shorter or after-hours issues do not meet the definition.
- Outsourced systems count. A vendor's failure is still the broker's glitch.
- 10,000 registered clients, IBT/STWT brokers, measured on 31 March of the previous year.
- Deadlines: inform in 2 hours; Preliminary Incident Report T+1; RCA in 14 days.
- 75 minutes vs 15 minutes is for exchange outages: 75 for the affected exchange to notify, 15 for the backup exchange to activate its BCP.
- IRRA has been discontinued. Answer with the exchanges' Contingency Pool Trading facility. The workbook dates the circular March 27, 2026, while its footnote link carries a May 2026 path; treat the facility, not the date, as the tested point.
Where this is taught
- Series XVI · Chapter 6: Trading Mechanismintroduced here
- Series VII · Chapter 3: Introduction to Securities Broking Operationsintroduced here
Related terms
- Algorithmic tradingAny order generated by automated execution logic rather than typed in by a person — software that pushes buy and sell orders into the exchange once its parameters are met.
- Trader WorkstationThe terminal through which a trading member logs in to the exchange's trading system to enter orders and view its own orders, trades and market information.
- Business Continuity PlanThe plan a Category III AIF and its key service providers must have to keep operating through disruptions such as system failure or the loss of key personnel — no specific figure is given.
- Cyber Security RiskThe risk that an AIF's or its service providers' systems are breached, corrupted or disrupted — governed by SEBI's Cyber Security and Cyber Resilience Framework, which all AIFs had to comply with by 31 August 2025.
- IRRA platformInvestor Risk Reduction Access — a joint exchange platform that lets individual investors square off open positions and cancel pending orders when their trading member's services are disrupted by a technical glitch.