Microsoft ‘Blue screen of death’ outage: India's BSE, NSE dodged tech bullet with unlikely hero - Lower IT spending?

A CrowdStrike cybersecurity update caused widespread system shutdowns for devices equipped with Microsoft Windows, on July 20. However, India's National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) remained unaffected, contrasting sharply with the disruptions faced by other major exchanges like the London Stock Exchange.

IT expenditure comparison

Despite spending considerably less on IT infrastructure compared to their international counterparts, the Indian stock exchanges managed to avoid the disruptions. According to Business Today, the NSE allocates ₹570 crore for IT expenses, significantly lower than the London Stock Exchange Group (LSEG) at ₹6,556 crore, NASDAQ at ₹1,949 crore, and the Hong Kong Exchange (HKEX) at ₹6,807 crore.

In terms of total costs, the NSE reported ₹3,036 crore, in contrast to NASDAQ's ₹23,734 crore and HKEX's ₹69,313 crore. Revenue figures for these exchanges were also reported, with the NSE earning ₹12,692 crore, NASDAQ ₹32,574 crore, and HKEX a substantial ₹171,575 crore, the report added.

Sebi's IT spending

India’s market regulator, the Securities and Exchange Board of India (Sebi), also spends significantly less on IT, with an annual expenditure of ₹93 crore. This is notably lower than the Australian Securities & Investments Commission (ASIC) at ₹205 crore and the Monetary Authority of Singapore's outlay of (MAS) ₹420 crore.

Insights on system resilience

The resilience of Indian exchanges amid the outage highlights the importance of system diversity,  Sanjeev Sanyal, a member of the Economic Advisory Council to the Prime Minister (EAC-PM), noted.

He shared his views on X (formerly Twitter), stating, "This is why genetic diversity is important. A unified, interconnected global system is a bad idea. A less interconnected system may appear inefficient but will be more resilient. This is an important conclusion of the Complex Adaptive Systems-based AI regulation approach."

Sanyal has also proposed a comprehensive framework for AI regulation, suggesting the establishment of a specialised AI regulator with a broad mandate and the creation of a national registry of algorithms. He emphasised the complex nature of AI systems in his EAC-PM research paper, stating, "AI systems function like CAS (Consolidated Account Statement), with components that interact and evolve in unpredictable ways. This complexity can trigger butterfly effects, where small changes lead to significant and unforeseen consequences."