SEBI Mandates Interoperability Among Exchanges for Outage Response
SEBI, the Securities and Exchange Board of India, made an important announcement on Thursday about ensuring that stock exchanges are prepared in case of outages. They are mandating interoperability among exchanges to have a backup plan if one exchange goes down.
Starting from April 1, 2025, the National Stock Exchange (NSE) and BSE will serve as alternative trading venues for each other under this new framework. This move is aimed at protecting investors with open positions who could be at risk if a trading venue suddenly goes offline during trading hours.
To ensure smooth transitions during such events, SEBI has asked exchanges to create a joint standard operating procedure (SOP) within 60 days. This SOP will outline how to handle outages, the roles and responsibilities of each exchange involved, and how to keep trading going seamlessly.
In the event of an outage, the affected exchange must inform SEBI and the alternative trading venue within 75 minutes. The alternative trading venue will then activate the business continuity plan within 15 minutes. Exchanges are also required to set up the necessary infrastructure for these measures.
For stocks exclusive to one exchange, reserve contracts will be created to ensure continuity. And for certain types of products like common stocks, single-stock derivatives, correlated indices, and currency derivatives, participants can hedge their positions by taking offsetting positions on other exchanges.
SEBI emphasized that having this interoperability will allow investors to trade smoothly across different venues and minimize any disruptions caused by outages. If an exchange doesn’t have a corresponding index derivatives product, they may consider creating one to align with regulatory guidelines. This new framework aims to safeguard investors and keep the market running smoothly in case of unexpected downtime.
