What is the new Investor Risk Reduction Access platform, and how it stands to benefit investors

Context- The Investor Risk Reduction Access (IRRA) is a platform that will act as a ‘safety net’ for investors in case of technical glitches faced by a trading member or a stock broker registered with SEBI. It will provide investors an opportunity to close open positions and cancel pending orders in case of disruption at the stock brokers’ end.

(Credits- Visual Capitalist)

IRRA has been jointly developed by all the stock exchanges – BSE, NSE, NCDEX, MCX and Metropolitan Stock Exchange of India (MSE) and was launched Monday by Securities and Exchange Board of India (SEBI)

What is the IRRA platform?

  • IRRA platform has been developed to reduce risks faced by investors in the eventuality of technical glitches at the trading member’s end at both the primary site and disaster recovery site.
  • Its purpose is to provide investors with an opportunity to square off/close their open positions and cancel pending orders using the IRRA platform in case of technical glitches or unforeseen outages that render the trading member’s site inaccessible.
  • SEBI chairperson said the IRRA platform has been designed to reduce risks for investors participating in the market. It is not meant for taking fresh positions or orders, but only to cancel the pending orders.

Why was there a need for it?

  • With increasing dependence on technology in the securities market, there has been a rise in instances of glitches in trading members’ systems, some of which lead to disruption of trading services and investor complaints.
  • In such instances, investors with open positions are at risk of non-availability of avenues to close their positions, particularly if markets are volatile.

How will the IRRA platform work?

  • IRRA can be invoked by trading members when they are faced with a technical glitch at their end impacting their ability to service clients across exchanges from both – the primary site and disaster recovery site, where relevant.
  • Even stock exchanges can also monitor parameters like connectivity, order flow and social media posts, and suo moto initiate the enablement of the IRRA service, if needed, irrespective of any such request by the trading member, according to SEBI.
  • This service shall be enabled by the exchanges, suo moto, only in case of disruption of trading services of trading member across all the exchanges, where the trading member is a member
  • On invocation, after basic checks, the platform downloads trades of the trading member from all the trading venues and sends SMS/email to investors using internet trading or wireless technology along with a link to access IRRA.

How will the platform help investors?

  • Once the investors are authorized to access the IRRA platform, investors can view and cancel pending orders across all segments and all stock exchanges from the order book, square off/close the open positions across segments and exchanges and cancel the orders across segments which are pending at the exchanges.

What is the timeline for a trading member to request migration to the IRRA platform?

  • Before requesting stock exchanges to migrate to the IRRA platform, trading members are required to put efforts into restoring the primary and DR sites.
  • A trading member can inform the stock exchange via email to migrate to the IRRA platform before the start of the market session or after the start of the market but at least 2.5 hours before the scheduled closure of market hours of the segment in which it holds an open position.

How will the reverse migration of a trading member from the IRRA platform happen?

  • Based on the trading member’s request and confirmation from all exchanges, the IRRA system services will be shut down to enable the trading member to resume business from the original trading system.
  • In this scenario, the trading member will need to take a full download from the exchanges in order to get the latest state of orders and trades.

Syllabus- Prelims; Current Affairs

Source- Indian Express


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