Clearing corporations of NSE, BSE have 'fridge-like' backup for risk management: Sebi's Madhabi Buch

Sebi's Chairperson Madhabi Puri Buch said that the clearing corporations have set up a system very similar to what mothers used to have in the earlier days, to preserve curd.

The clearing corporations of the National Stock Exchange (NSE) and BSE Ltd have built a 'fridge-like' technological backup system for risk management, said Sebi chairperson Madhabi Puri Buch at an SBI Mutual Fund event held on July 19.

NSE's clearing corporation is called NSE Clearing Ltd and BSE's is called Indian Clearing Corporation Ltd.

The Chairperson of the Securities and Exchange Board of India (Sebi) said that if the risk management system of one of the clearing corporation's shuts down, the other one kicks in.

Also read: FNO trading volumes now a macro concern, with household savings diverted to speculation: Sebi's Madhabi Buch

Meaning, if the risk management system of one clearing corporation faces a glitch, the risk management system of the other clearing corporation kicks in, even though it is the same system.

Buch cited a familiar household example to explain. She said, earlier, whenever the refrigerators at our homes stopped working, our mothers would send us to our neighbour's to keep the curd in their fridge and prevent it from getting spoilt -- like a backup system. Similarly, she said, NSE and BSE have a system to support each other.

The Sebi Chairperson said, "The motive of the backup system is to ensure that the real-time transactions of the investors should not stop.

On July 19, software updates from American cybersecurity technology firm CrowdStrike triggered a significant disruption in Microsoft Windows services worldwide, causing the infamous “Blue Screen of Death” error on numerous computers. This widespread glitch has led to severe interruptions in various sectors, including aviation, banks, brokerage firm, etc.

Users of Angel One, 5Paisa, IIFL Securities said on X platform (formerly Twitter) that their market orders weren't going through owing to glitches on the apps.

On F&O

Buch also spoke about the surge in volumes in futures and options (F&O) trading at the event and delved on how the regulator's concerns have expanded.

Buch said that the regulator is now concerned not just at a "micro-level" (of the nature of F&O trading putting investors at risk), but also at a "macro-level", concerning the chances of it disrupting economic growth.

Also read: When Madhabi Puri Buch clashed with Nilesh Shah

She said, "It has now reached a scale where we feel that the micro objective of protecting the individual investor has changed to the point to thinking about (this being a) macro issue... (questioning if this) is what our market is designed to do, to basically facilitate a lot of speculative transactions."