Sebi's New Framework for Seamless Trading on Stock Exchanges

New Delhi, Nov 28 (PTI) Markets regulator Sebi on Thursday came out with measures to ensure seamless trading during technical outages, particularly in interoperable segments like equities, derivatives, and currency markets on stock exchanges.

The measures are aimed at strengthening the Business Continuity and Disaster Recovery mechanisms at stock exchanges.

Under these measures, Sebi said that for identical or correlated products-- single stock derivatives, index derivatives -- participants can hedge their positions on another exchange during an outage. Margins for such positions will be netted off.

Also, exchanges must create "reserve contracts" for stocks or derivatives exclusively listed on one exchange to ensure continuity during outages.

Further, exchanges lacking correlated index derivatives must consider creating such indices and introducing related contracts to provide hedging options.

The affected exchange has been directed to notify Sebi and the alternative exchange within 75 minutes of an outage. The alternative exchange will activate its continuity plan within 15 minutes of receiving the intimation.

Initially, NSE will serve as the backup trading venue for BSE and vice versa. Both exchanges will jointly prepare a Standard Operating Procedure (SOP) outlining responsibilities, processes, and required system updates.

The SOP must be submitted to Sebi within 60 days.

The new measures, which will come into effect from April 1, 2025, are aimed at enhancing investor protection and maintaining the smooth functioning of markets during unforeseen disruptions.