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MINUTES OF REDRESSAL MEETING

Ref. No: - V / C/ 202307 /79 Date: 76.08.2023 Time: 11.00 AM - 12:00 PM

Quorum : Ivlrs. Gurpreet Kaur

Complainant: Mrs. Madhu Gupta

Respondent: ZerodhiBroking Ltd (Clg No-6498)
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Appearance:

From Complainant NIr. Sumit Gupta (AR of Complainant)

From Member Ms. Pankathi Jain (AR of Responclent)

lvlode of Hearing Video-Conferencing

The Exchange has facilitated this GRC online via Videoconferencing. Parties attended the
meeting through video-conferencing post submission of declaration. The GRC member
has also consented to preside over the meeting via videoconferencing-.

Minutes

Mr. Sumit Gupta Authorized representative of Mrs. Madhu Gupta was Present via
videoconferencing and Ms. Pankathi ]ain authorized representative of Zerodha Broking
Ltd. was also present via videoconferencing. The identity of the authorized
representative of the respondent was duly verified by the Exchange official.

A. Submission(s) from complainant:

The Complainant submitted all the relevant documents with respect to her claim in
advance through E- Mail.

The Authorized Representative Claimed that due to disruption in the services rendered
by Trading Member on A7.A7.2023 during 2:47 P.M to 3:30 P.M, she incurred a loss-
(Reduction in Profit)

a) She had a short position of 500 quantities in SENSEX2370765300PE at an average price

of Rs. 20.

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b) During the glitch period, she tried to place the order at Rs. 3 to square off the position.
The market was in her favor too.

c) On the expirv dav for SENSEX237O765300PE, the Position was setlecl at Rs.19.55.

When She was not able to place an orcler on their application, she triecl calling their call
center to square off his position at a tlesirable price. But all efforts h,ent in Vain.

This led to reduction in profit of Rs. 9500 i.e. (Rs. 20- Rs. 3).

The Authonzed Representative further claimed that Respondent's kite Platform was not
functioning properly, and he raised the issue on the same day. He further Quoted Hon'ble
Delhi High Courf Reliance Securities Limited Vs. Vivek Sharma to support his
contention.

Further during the discussion, he highlighted the same incident that happened on 30e
June2023 for 74 Minutes-

Response from Trading Member (TM)

Trading Member accepted, that there was technical glitch in their operation svstem and
referred dause 9 and 10 of their Risk Disclosure document "Intemet & wireless
technology-based trading facility provided by stock broker to the client "which state that

'9- The client is awaie that trading over the internet involves many uncertain factors and
complex hardware, software, systems, communication lines, peripherals, etc. are
susceptible to interruptions and dislocations. The Stock broker and the Exchange do not
make any rePresentation or warranty that the Stock broker's IBT Service will be available
to the Client at all times without any intermption.,'

10- The Client shall not have any claim against the Exchange or the Stockbroker on
account of any suspension, interruption, non-availability or malfunctioning of the Stock
broker's IBT System or Service or the Exchange's service or systems or nonexe'cution of
his orders due to anv link/system failure at the Client/Stock brokers
/Exchange end for
any reason beyond the control of the stockbroker/Exchanges-,'

Contention on Claim

Respondent further contended that reduction in profit is a notional loss or opportunity

loss and they cannot be made liable for the same. As per respondent, ]vlaclhu bupta on

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MINUTES OF GRIEVANCE REDRESSAL COMMITTEE MEETING

exprr,v of the position earned a profit of Rs.225 {(Rs 20 - Rs 19.55) *500}. She did not book
anv loss in the book of account, hence there is no claim.

Submission of Respondent, On questioning upon

a) Cause of Interrgption: - Respondentstated that on 07.07.2023, the Technical Glitch

was caused due to the utilization of bandwidth to its maximum capacity. Further
respondent affirms that same issue was also reported on 30th June 2023 (i.e.Day of
weekly Expirv). Respondent informed us that they had taken a leased line of 4
Mbps i.e., Minimum bandwidth supplied by the exchange and when system noted
on the first instance i.e., on 30.06.2073, that its unable to handle order on existing
bandwidth they applied for extension to BSE. This upgrade did not happen till 6m
JuJy 2023. On TthJuly 2023 i.e. Dav of Weekly Expiry, Svstem was unable to process
the existing bandwidth. This time the operation was affected from 2.47pm till the
closure of Market. (as reported.by Respondent in their bulletin.)
b) On Back -Up Plan: - Respondent stated that for this issues they did not have any
backup plan. Even their Call center st#f was unable to execute any order due to
the above-mentioned issue. Further Respondent mentioned that every glitch is
different from another, and therefore they are unable to have anv standard
procedure for handling such problems.
c) On BSE Circular 20221216-52D1.16.12.2022: - This circular relates to Framework
to address the 'Technical Glitches' in Stockbrokers Electronic Trading Svstems
which is effective from 01.04.2023.

Respondent affirms that 4mbps bandwidth is taken without any capacity

planning as stated in the circular-

a Action taken - Alert on 7 0']h cap acity utilization.

Respondent states that no action was taken by them as they don t have any
mechanism for monitoring.

a Monitorins Mechanism - Applicable to So ecified Member

Respondent stated that they do not have monitoring key systems and
functional parameters to ensure that their trading system functions in a smooth
manner. One of the key parameters for LAMA under the Network category is
Bandwidth utilization.

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MINUTES OF GRIEVANCE REDRESSAL COMMITTEE MEETING

Tlrcy nre erpectirtg tlrc BSE ruill prouide tlrc snnrc. In their root cause nnalysis
for
Tecluticnl Glitch on 07.07.2023 under lortg ternr preretiiue actiott, it is requestedby
Trodittg Mernber to BSE tlmt tlrcy Ttroride n dnshbonrd for nnnitoring bnndtuidtlt
usnge for tlrcir erclnrtge links on t renl-tinrc bnsis.

d) Execution of O.rder placed by complainant: Responclent affirms that the chance

of execution of order punched in bv the complainant is more likelv to happen than
not. The client order is executed after validating for all RNIS Checks.

Observations of the GRC Member:

I have hearcl both the parties and have gone through all the documents provided bv the
exchange.

It is observed that Trading member fails to complies with Framework to address the
'Technical Glitches' in Stockbrokers Electronic Trading System dt 16.72.2022 ettectle
from 01.04.2023 in following area:-

a) Capacity Planning

b) Monitoring Mechanism

Despite having the bandwidth utilization issue on30.O6-2023, member let their customer
execute ttre order onOT .A7.2023 without any backup plan. Respondent's claim that factors
are beyond their control is without merit (Refer Point 9 and 10 of their Risk Disclosure
Agreement quoted above). As per exchange of{icials' alerts were sent to them on 7O%
utilization, still no corrective actions were taker{Uy tf," Trading Member. However, it is
concluded that Responden! despite having incapabilitv of handling orders let their client
execute orders on Kite Plafform which led to loss of hard-earned money of their
customers.

Respondent's claim aboutnotional loss is considered as Invalid; as order for squaring off
is executed by the complaint and he made each possible effort for its successful execution
and market rate was also favoring him. Further there were no reasonable cause for being
unsuccessful.

It is observeci that Responclent fails to provide smooth sen ices to their customers.

Recommendations of GRC:

Tl-rerefore, in rrien. of abor.e discussion, I am oi the consiclerate r-ierv that the ciain-r .rf the
complain;rnt is maintainable.

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MINUTES OF GRIEVANCE COMMITTEE MEETING

ClaimAmounfi Rs.8500

Admissible Claim: Rs. 8225*

#Claim Amount = (Rs. L9.55 - Rs. 3)*500 = 82?5

While hearins of similar nature it is observed that the technical glitch started at
cases
L4:43 PM and remains till market closure. Tota1 time for technical slitch is more than
45 Minutes. Member is req uired to submit independent auditor report for technical
as the d It is re uested to BSE
investisate the matter in detail to the interest of the investors.

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Signature of GRC Member
Name - Gurpreet Kaur

ACKNOWLEDGEMENT OF PARTIES ON RECEIPT OF GRC ORDER

Signature of Complainant Signature of Trading Member

The present tter was heard through Webex/video conference. At this stage, it
is neither possible to sign a copy of this minutes nor a certified copv of this minutes
could be issued by the Exchange. In these circumstances, this unsigned/ digitaily
signed copy of approved minutes would be circulated to the parties on email
pursuant to our directions and the concemed parties are directed to act on the
same.

Delhi Regional Office

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