Business Continuity for Interoperable Segments of Stock Exchanges
Summary
SEBI mandates Business Continuity Planning for interoperable segments of stock exchanges to mitigate price risk during trading venue outages. Exchanges must establish mechanisms such as reserve contracts or correlated index derivatives to allow participants to hedge open positions on alternative venues. Affected exchanges are required to intimate SEBI and the alternative trading venue within 75 minutes, while the alternative venue must invoke its plan within 15 minutes.
Text
In order to strengthen the Business Continuity framework of MIIs... following has been decided for the interoperable segments of stock exchanges...
If identical or correlated trading products are available on another trading venue, then participants can hedge their open positions by taking offsetting positions in identical or correlated indices on other exchange.
To ensure continuity, exchanges may create reserve contracts for scrips (i.e. exclusively listed scrips on other exchange) and single stock derivatives not traded on their exchange... to be invoked at the time of outage on the other exchange.
Exchange which does not have a highly correlated index derivatives product with one available on other exchange may consider creating such an index and introducing derivatives contracts on it... The aforesaid would provide an avenue to hedge positions in index derivatives products of an exchange that suffered an outage.
The affected exchange should comply with extant Regulatory requirements with regard to handling of technical glitch/ outage and intimate about the invocation of the instant business continuity mechanism to the alternative trading venue and SEBI within 75 minutes of occurrence of impact. The alternative trading venue would invoke the business continuity plan as per the Standard Operating Procedure (SOP) within 15 minutes from such intimation.
Upon discussion with exchanges, it has been decided that to begin with, NSE would act as an alternative trading venue for BSE and vice-a-versa. Both exchanges would prepare a joint SOP... The aforesaid SOP should be submitted to SEBI within 60 days from the date of the Circular.
The Stock Exchange and Clearing Corporations are also directed to: 5.1. Take necessary steps to put in place requisite infrastructure and systems... 5.2. Bring the provisions of this circular to the notice of their members and also disseminate the same on its website; and 5.3. Communicate to SEBI, the status of implementation of the provisions of this circular.
The provisions of this circular would come into effect from April 01, 2025.
This circular is issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.
Source: SecMarx — Business Continuity for Interoperable Segments of Stock Exchanges. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.