On Nov. 28, 2024, IND SEBI issued decisions made following discussions with exchanges, CCs, stock brokers, to address trading venue outages during trading hours.
Participants can hedge open positions in identical or correlated trading products on alternative venues, which releases client margins and requires no separate treatment.
For exclusively-listed scrips or derivatives not available on other exchanges, reserve contracts will be created and invoked during outages to ensure trading continuity.
Exchanges without highly-correlated index derivatives are encouraged to create and introduce such products to provide hedging options in the event of an outage.
Affected exchanges must notify SEBI, alternative trading venue within 75 minutes of outage, alternative venue must activate BCP within 15 minutes of receiving intimation.
NSE, BSE will serve as alternative trading venues for each other, with both preparing a joint SOP detailing outage management plans, roles, responsibilities within 60 days.
Stock exchanges and clearing corporations must develop necessary infrastructure, amend regulations, notify members, and update SEBI on implementation status.
The provisions of the circular will take effect from Apr. 1, 2025.
In Feb. 2025, IND NSE informed of mock session for SaaS model, see #242890.
On Dec. 20, IND SEBI wrote re SaaS model for risk management.
IND SEBI issued circular to all stock exchanges and all clearing corporations (CCs) regarding business continuity for CCs through software as a service (SaaS) model.
Follows IND ICCL Mar. 2023 launched module across clearing corporations, #167980.
Also follows IND SEBI Oct. 2023 issued master circular for stock exchanges, #188261.
Proposal Overview
Risk management system (RMS) is classified as critical system of CC, plays important role in ensuring smooth and uninterrupted functioning of securities market by carrying out online real-time risk management of trades happening on stock exchanges.
Non-availability of RMS poses major risk to continuity of trading on stock exchanges.
IND SEBI stated in order to further manage disruptions impacting availability of RMS, it is proposed to have another contingency measure in place under SaaS model.
The framework in the first phase would operate for existing interoperable segments of CCs (cash market, equity derivatives segment, currency derivatives) as set out below.
SaaS Model for Risk Management System
Each CC shall design a system to run its RMS related operations, to risk manage trades for its clearing members, using the RMS related software components of another CC.
This instance would be called SaaS-RMS; for instance, when IND NSE designs SaaS-RMS using software of IND ICCL, IND NSE would be considered as client CC and IND ICCL would be considered as service provider CC; set out arrangements between each.
In addition, circular contains schematic diagram illustrating functioning of SaaS-RMS involving exchanges, CCs and clearing members (CMs); stipulated timelines re same.
SaaS-RMS would be considered as a redundancy model for the CCs as part of the business continuity framework; IND SEBI said CCs and exchanges are therefore directed to implement prescribed measures within 30 days of this circular (by Jan. 20).
IND SEBI directed stock exchange, CCs, as well as depositories i.e. to take necessary steps to put in place infrastructure and systems for implementation of this circular.
In light of above, IND SEBI advised stock exchanges and CCs to submit their revised business continuity policy to IND SEBI by Feb. 20, 2024 (2 months from Dec. 20).
Effectiveness
Circular will be effective immediately; measures to be implemented by Jan. 20, 2024.
Revised business continuity policy shall be submitted by Feb. 20, 2024, per above.
Jan. 2024 Deferral
On Jan. 19, 2024, IND ICCL said business continuity for CCs through SaaS mode, which was originally scheduled for Jan. 20, 2024, has been deferred to a later date.
Sep. 2024 IND NSE Mock Sessions
On Sep. 20, 2024, IND NSE issued circulars re timings for the SEBI-mandated mock session which will be conducted by NCL on Sep. 21, 2024, to test the SaaS set up.
Members are requested to test all functionalities related to SaaS setup during mock session; members who already have login credentials can use them for the session.
Nov. 2024 IND NSE Coming Mock Sessions
On Nov. 7, 2024, IND NSE said the coming quarterly mock session will be held on Nov. 9, 2024, members are required to participate, test SaaS-related functionalities.
Document dated Nov. 7, 2024, received from IND NSE Nov. 8, summarized on Nov. 12.
Nov. 28, 2024 Interoperable Segments
On Nov. 28, 2024, IND SEBI issued decisions made following discussions with exchanges, CCs, stock brokers, to address trading venue outages during trading hours.
Participants can hedge open positions in identical or correlated trading products on alternative venues, which releases client margins and requires no separate treatment.
For exclusively-listed scrips or derivatives not available on other exchanges, reserve contracts will be created and invoked during outages to ensure trading continuity.
Exchanges without highly-correlated index derivatives are encouraged to create and introduce such products to provide hedging options in the event of an outage.
Affected exchanges must notify SEBI, alternative trading venue within 75 minutes of outage, alternative venue must activate BCP within 15 minutes of receiving intimation.
NSE, BSE will serve as alternative trading venues for each other, with both preparing a joint SOP detailing outage management plans, roles, responsibilities within 60 days.
Stock exchanges and clearing corporations must develop necessary infrastructure, amend regulations, notify members, and update SEBI on implementation status.
The provisions of the circular will take effect from Apr. 1, 2025.
In Feb. 2025, IND NSE informed of mock session for SaaS model, see #242890.
