The regulator fears that access to such data could be blocked by another country in the event of a data war
The Securities and Exchange Board of India (SEBI) may issue guidelines shortly mandating foreign entities to store data pertaining to India locally, reports Business Standard. Financial institutions like Citi, JP Morgan, HSBC and Deutsche Bank operate brokerage and custodian services in India and typically prefer to store data digitally at their regional centres such as in Hong Kong and Singapore.
The regulator fears that access to such data could be blocked by another country in the event of a data war. “Foreign brokerages access servers in Singapore and Hong Kong for their daily transactions. Now, what happens if a country like China cuts off access to that in Hong Kong? It may seem like an extreme situation but we can potentially become a data colony of some other country,” a senior industry official told the paper.
To mitigate such a risk, SEBI wants all such data to be stored on Indian servers or real-time back up be created, thus enabling local access, the report stated. However, experts told the paper that both these arrangements could significantly jack up costs for foreign players as it entails huge investment in infrastructure, technicians, maintenance and space. “Creating a real-time back up of data is almost as challenging,” the official said.
As per the report, SEBI is likely to take a call on this matter soon, which will impact all entities regulated by it. It is also likely to take into account recommendations of a panel led by Ashok Jhunjhunwala, Professor at Indian Institute of Technology, Madras.
The SEBI diktat comes close on the heels of the Reserve Bank of India’s April 2018 order asking global payment companies to store transaction data of Indian customers locally. The government fears foreign regulators can access data relating to the financial sector, the report said.“The regulator’s concern is justified if data is stored at certain specific locations within Asia. But if it is kept with global providers such as Dropbox or Microsoft, then we are at same risk as any other country,” Viraj Kulkarni, founder and CEO, Pivot Management Consulting told the paper.