Sebi wants special review of stock exchanges’ trading systems after NSE glitch
Sebi wants a special review of exchanges’ trading systems, back-up arrangements and disaster recovery plans in the wake of a major technical glitch at the NSE
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New Delhi: Securities and Exchange Board of India (Sebi) wants a special review of exchanges’ trading systems, back-up arrangements and disaster recovery plans, including handling sudden surge in volumes, in the wake of a major technical glitch at the National Stock Exchange (NSE) on Monday, people familiar with the matter said.
Besides, the regulator is working on stronger checks against any possible cyber threat following the recent spate of ransomware attacks that hit computer systems globally. On Monday, trading activities on the country’s largest exchange NSE were halted for over three hours. Investors had faced problems in executing trade in cash as well as Futures and Options (F&O) segments.
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Following the disruption, Sebi sought a detailed report from NSE on the glitch in its system. It also asked the exchange to have a review of their ‘business continuity plans’ as well as submit a detailed plan on the measures that are going to be taken to avoid such recurrences. Besides, the regulator is looking at the matter comprehensively and will interact with different stakeholders to explore as to what more needs to be done to avoid a repeat.
Sebi is keen on a special review of trading systems, back-up arrangements and disaster recovery plans, according to people familiar with the matter. A disaster recovery site is necessary for critical institutions like exchanges so that operations can be done seamlessly and smoothly if any extraneous event affects the functioning of the main trading centre in Mumbai.
In its submission to Sebi on Monday, NSE ruled out the possibility of cyber security problem that halted its trading systems based on the preliminary analysis. People familiar with the matter added that initial investigation suggested that the surge in derivative trading volumes as investors hedged their participatory notes (P-notes) positions could be the possible reason for the technical snag at NSE.
Sebi, last week, put in place restrictions on foreign portfolio investors from issuing participatory notes where the underlying asset is a derivative. NSE on Tuesday said its operations returned to normalcy and emphasised that it would work towards strengthening its systems.
The regulator is working on stronger checks against any possible cyber threat following slew of dreaded ransomware attacks likes WannaCry and Petya that had impacted the computer systems worldwide in recent times. Sebi last reviewed norms pertaining to improve risk management to tackle volume at stock exchanges in October 2015. It had asked bourses and clearing corporations to enhance trading, clearing, settlement and risk management systems to at least 1.5 times of the projected peak load as trade volumes soar at stock exchanges.
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The projected peak load is calculated for the next 60 days based on the per-second peak load trend of the past 180 days. Under the existing norms, the per-half-hour capacity of the computers and the network should be at least 4-5 times of the anticipated peak load in any half an hour or of the actual peak load seen in any half an hour during the preceding six months.