SEBI has issued following directions to the interoperable segments of stock exchanges (i.e. Cash Market/ Equity Derivatives/ Currency Derivatives/ Interest Rate Derivatives etc.) to ensure business continuity:
- Common scrips, derivatives on single stocks or correlated indices, currency derivatives segment and interest rate derivatives: 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. Further, as these segments are interoperable, taking offsetting positions in other trading venue would net off such open positions for end clients and release the margin. Hence, no separate treatment is required for such category of products.
- Scrips exclusively listed on an 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 (and available on other exchange), to be invoked at the time of outage on the other exchange.
- Index derivatives products not having correlated index derivatives products on another 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, in line with extant Regulatory provisions. The aforesaid would provide an avenue to hedge positions in index derivatives products of an exchange that suffered an outage.
- Intimation to SEBI and Alternative Trading Venue: 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 that would include plan to be invoked at the time of outage on one exchange along with flow of activity involving the affected exchange and its alternative trading venue and roles/responsibility of each of them. Further, the SOP shall also cover changes, if any, in the systems of stock brokers / CCs to implement the measures. The aforesaid SOP should be submitted to SEBI within 60 days from the date of the Circular.
