BSE Committee Blames Zerodha’s Inaction For Tech Glitch, Brokerage Terms Order Blatant Mistake

The situation between Zerodha and the BSE GRC underscores the importance of reliability and prompt action in the financial services industry, particularly in the realm of online trading. Zerodha has challenged the GRC’s order, saying that the glitch was not caused by bandwidth issues as claimed by the GRC. Zerodha also said that it has refunded all legitimate claims. On July 7, 2023, Zerodha experienced a tech glitch that caused disruptions to trading on its Kite platform. Many traders were unable to place or modify orders, and some even reported losing money due to the glitch.

Zerodha initially blamed the glitch on its internet service provider (ISP). However, the GRC found that Zerodha had been alerted to bandwidth issues on June 30, 2023, but failed to take corrective action.

What did the GRC say?

In its order, the GRC said that Zerodha “failed to take any corrective action” despite being alerted to bandwidth issues. The GRC also said that Zerodha “failed to provide smooth services to their customers” and that the claim of the complainant seeking compensation was maintainable.

The GRC has directed Zerodha to pay the trader a compensation of INR 8,225 for the reduction in profit caused due to the technical glitch.

What did Zerodha say?

Zerodha has challenged the GRC’s order, saying that the glitch was not caused by bandwidth issues as claimed by the GRC. Zerodha also said that it has refunded all legitimate claims. Zerodha’s COO Venu Madhav said that the July 7 outage could not be attributed to bandwidth utilization as was wrongly claimed by the BSE’s Grievance Redressal Committee. Madhav also refuted all claims that the company has not refunded legitimate claims, saying the team has been given a mandate to assess and refund losses suitably.

What happens next?

It remains to be seen how the dispute between Zerodha and the BSE GRC will be resolved. Zerodha has said that it is considering all its legal options. Implications for tradersThe dispute between Zerodha and the BSE GRC is a reminder of the risks associated with online trading. Even large and well-established brokers like Zerodha can experience tech glitches that can cause losses to traders.

The dispute has implications for traders because it raises the question of who is responsible for losses caused by tech glitches. If the GRC’s order is upheld, it could set a precedent for other traders who have suffered losses due to tech glitches to file claims against their brokers. It could also lead to increased scrutiny of brokers by regulators.

Traders should be aware of the risks associated with online trading, even with large and well-established brokers like Zerodha. Traders should have a plan in place for dealing with tech glitches and other disruptions. Traders should also consider using multiple brokers to reduce their risk.

Traders should always be aware of the risks involved in online trading and should have a plan in place for dealing with tech glitches and other disruptions. Traders should also consider using multiple brokers to reduce their risk.

this case serves as a cautionary tale for both brokerage firms and traders in the online trading space. It emphasizes the need for robust technological infrastructure, swift issue resolution, and clear communication to maintain the trust and confidence of market participants.