SEBI to NSE: Fix responsibilities for trading halt fiasco


Capital market regulator SEBI has asked the National Stock Exchange’s (NSE) governing body to fix individual responsibilities for failing to shift its operations from the primary site to the disaster recovery (DR) site during the technical glitch on February 24 which led to a trading halt for nearly four hours.

In a statement on Monday, the regulator said that it has also advised the exchange to determine the reason for the failure to shift operations to the disaster recovery site during the specified time frame.

It has given the NSE a timeline of 21 days to follow the directions.

The SEBI statement noted that with regard to the trading halt at NSE on February 24, the bourse presented its detailed Root Cause Analysis (RCA) before SEBI Technical Advisory Committee (TAC) on March 22.

The TAC, after due deliberations decided that unannounced live trading session shall be conducted from DR site of the exchange with a notice of four hours from the SEBI before the start of the trading session, starting from April 2021.

They will also have to conduct live trading session from their DR site with a short notice of 45 minutes from SEBI before the start of the trading session, starting from July 2021.

“In the event of disruption in the ‘Critical Systems’ of the MII (market infrastructure institutions), the MII shall, declare that incident as ‘Disaster’ within 30 minutes of incident (earlier 2 hours) and take measures to restore operations including from DRS within 45 minutes (earlier 2 hours) from the declaration of ‘Disaster’,” it said.

Further MIIs shall study the feasibility of intra-day shifting from primary site to DR site with a notice of 45 minutes from the SEBI.

In view of the disruptions, the SEBI has come up with guidelines for Business Continuity Plan (BCP) and Disaster Recovery (DR) of exchanges.

Upon examination and based on consultation with MIIs and the SEBI’s TAC, the regulator decided that stock exchanges, clearing corporations and depositories shall have in place a BCP and a DRS so as to maintain data and transaction integrity.

Apart from the DRS, all MIIs including Depositories shall also have a Near Site (NS) to ensure zero data loss.

Further, the DRS should preferably be set up in different seismic zones and in case due to certain reasons such as operational constraints, change of seismic zones, among others, minimum distance of 500 km shall be ensured between the PDC and the DRS so that both are not affected by the same disaster.