Sebi tightens rules for exchange disruptions

SEBI headquarters. | Representative image

India’s market regulator said on Monday that stock exchanges and other market entities will need to switch quicker to their backup sites to resume operations in case of disruptions, weeks after a top exchange was shut down during trading.

The Securities and Exchange Board of India (SEBI) said in when critical systems are disrupted, institutions must declare a “disaster” within 30 minutes and take steps - including going to a back up - within the next 45 minutes.

NSE glitch on February 24 | Storage area network failure led to trading halt

The rules apply to stock exchanges, clearing corporations and depositories.

They come after the National Stock Exchange (NSE), the India’s largest, shut down for nearly four hours late last month. Traders and investors said lack of proper communication caused losses.

On the technical glitch that happened on February 24, 2021, it said, "On 24th February, post link failure, the SAN system at the primary data centre stopped functioning, which was completely unexpected."

The NSE added that the problem was caused by failover logic implemented by the vendor which did not conform to NSE’s stated design requirements, coupled with issues in the configuration done by the SAN vendor. The stock exchange even said that the specific failure logic used by the vendor was not communicated to NSE and was not appropriate for NSE’s setup, which led to the SAN failure.

Due to the digging and construction activity along the path between Near Disaster Recovery (NDR) in Mumbai BKC and the disaster recovery (DR) site in Chennai, the stock exchange faced instability in links from both service providers on February 24. Prior to this, operations continued without any interruption even after link failures.