In November 2024, the Securities and Exchange Board of India (SEBI)Â issued a circular under Section (11) of the SEBI Act, 1992, which empowers the SEBI to protect investor interests, regulate the securities market, and promote its development.
- Through this circular, SEBI has outlined a comprehensive Business Continuity Plan (BCP) for interoperability of stock exchanges and clearing corporations to address the issue of trading outages or glitches.
- The interoperability for cash, derivatives, and interest rate derivatives will come into effect from April 1, 2025.
Key Points:
i.SEBI has mandated the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) to act as a backup to each other, in case of any trading outage.
ii.It has been decided that for the initial phase, the NSE would act as an alternative trading venue for BSE and vice-versa. Both the exchanges have been directed to prepare a joint Standard Operating Procedure (SOP)Â that would include plans to be invoked at the time of outage.
- Both the stock exchanges are required to submit the aforesaid SOP to SEBI within 60 days from the date of the circular.
iii.In case of an outage, the affected exchanges are required to inform SEBI within 75 minutes of the occurrence and invoke BCP. The alternative trading venue will implement a continuity plan within 15 minutes of such intimation.
Other Key Provisions:
i.If identical or correlated trading products are available on another trading venue, then traders will be able to hedge their open positions by taking offsetting positions in identical or correlated indices on other exchanges.
- As these segments are interoperable, so no separate treatment is required for such a category of products.
ii.For Scrips exclusively listed on an exchange, the other exchanges are allowed to create reserve contracts for them and also for single stock derivatives not traded on their exchange, to be invoked at the time of an outage on the other exchange.
iii.The stock exchange which does not have a highly correlated index derivatives product available on the other, then the exchange may create such an index and introduce derivatives contracts on the same.
- This would provide an option to hedge positions in index derivatives products of an exchange that suffered an outage.
Recent Related News:
The Securities and Exchange Board of India (SEBI) issued a circular under Section 11(1) of the SEBI Act, 1992, which empowers SEBI to protect investor interests, regulate the securities market, and promote its development.
- The circular abolished the earlier requirement mandating issuer companies to deposit 1% of the public issue size with stock exchanges before launching a public issue. This change was formalized through an amendment to the Regulation 38(1) of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (ICDR Regulations) on 17th May 2024.
About Securities and Exchange Board of India (SEBI):
The SEBI was constituted as a non-statutory body on April 12, 1988 through a resolution of the Government of India(GoI). It was given statutory powers on 30 January 1992 through the SEBI Act, 1992.
Chairperson– Madhabi Puri Buch(First woman)
Headquarters- Mumbai, Maharashtra
