What is the new Investor Risk Reduction Access platform

What is the new Investor Risk Reduction Access platform

Subject: Economy

Section: Capital market

Context: India’s stock exchanges, including BSE and NSE, have jointly developed the IRRA platform to reduce risks faced by investors due to certain technical glitches.

What is the IRRA platform:

• The IRRA platform was created to mitigate risks for investors in the event of technical glitches occurring at the trading member’s primary and disaster recovery sites. 
• This platform allows investors the opportunity to close existing positions and revoke pending orders should disruptions occur at the stock broker’s end.
• An open position refers to a trade that still has the potential to generate either a profit or a loss. Essentially, the IRRA platform serves as a solution during technical glitches or unexpected outages that may render the trading member’s site inaccessible.
• Its primary objective is to decrease risks for investors involved in the market.
• Importantly, the IRRA platform is not intended for initiating new positions or orders;
• Its sole purpose is to facilitate the cancellation of pending orders.

Who has developed it:

• IRRA has been jointly developed by all the stock exchanges – BSE, NSE, NCDEX, MCX and Metropolitan Stock Exchange of India (MSE).

Why was there a need for it:

• As reliance on technology in the securities market grows, so does the occurrence of glitches in trading members’ systems, leading to disruptions in trading services and investor grievances.
• This poses a risk for investors with open positions, especially during market volatility, as avenues to close positions may become unavailable.
• Recognizing that existing business continuity plans may not always prevent disruptions, such as delays in moving to a Disaster Recovery site or cyber-attacks, the Securities and Exchange Board of India (SEBI) announced a contingency service by stock exchanges in December of the previous year.
•  Referred to as the Investor Request Router and Aggregator (IRRA), this system serves as a safety net, providing a backup solution for potential disruptions in trading services.

How will the IRRA platform work:

• The Investor Request Router and Aggregator (IRRA) can be activated by trading members facing technical glitches that impact their client services across exchanges, both at the primary and disaster recovery sites.
• Stock exchanges also have the authority to monitor factors like connectivity, order flow, and social media posts, allowing them to initiate the IRRA service independently if necessary, even without a specific request from the trading member.
• This activation by exchanges occurs only when there is a disruption in trading services for a trading member across all relevant exchanges.
• Upon invocation, the platform performs basic checks, downloads trades from all trading venues of the trading member, and notifies investors via SMS/email, providing a link to access the IRRA.

How will the platform help investors:

• Once the investors are authorized to access of 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