SEBI Lists Standard Operating Procedure For Stock Exchange Outage

The Securities and Exchange Board of India listed the standard operating procedure that should be followed if there is a stock exchange outage and trading hours get extended due to it.

The capital markets regulator defined "stock exchange outage" as stoppage of continuous trading, either suo moto by exchange or by virtue of reasons beyond control of the stock exchange.

Exchanges have been ordered to roll out a common close-out policy within 30 days to ensure uniform methodology of settlement of open positions—in case continuous trading didn’t happen in cash market or equity derivative segment of the exchange during the last half hour of trading for the day due to outage.

Stoppage of continuous trading will not include trading halt on account of index-based market-wide circuit breaker, SEBI said in a circular issued on Monday.

Exchanges will have to inform market participants, trading members and other market infrastructure institutions within 15 minutes of an outage, through a broadcast message and notice on their websites. The bourses will have to inform SEBI immediately about any outages through an e-mail, the SOP mandated.

Updates regarding the outage will have to be shared on these two channels, at intervals of 45 minutes from the initial intimation till the issue is resolved. The stock exchange will have to mention extension of trading hours, if applicable, in the intimation as well, the circular said.

The unaffected segments of the exchange can trade and so can all other unaffected exchanges in all of their market segments.

"Affected stock exchange would restore operations to normalcy at the earliest, including from the Disaster Recovery Site and carry out various activities, in terms of SEBI circular dated March 22, 2021, on Business Continuity Planning and Disaster Recovery and SEBI circular dated July 5, 2021, on Standard Operating Procedure for handling of technical glitches by MIIs and payment of "Financial Disincentives" thereof, as applicable," the regulator said.

Market participants will have to be informed 15 minutes before trading resumes, with a pre-opening session for effective price discovery.

If trading resumes at least an hour before the scheduled market closure, trading hours on that day for all stock exchanges will remain unchanged. If this duration exceeds the one-hour mark, trading hours for all stock exchanges would automatically get extended for an additional 1.5 hours for that day.

This would have to be intimated by the affected stock exchange to the market participants, other MIIs and SEBI, latest by one and a quarter hours latest before the normal scheduled market closure.

If the outage continues for 45 minutes or more after the exchanges closes, no further trading will be allowed on the affected exchange on that day. Other exchanges will be allowed to operate for the extended time, to enable smooth closure or settlement of intraday positions.

If the outage happens during the last trading hour of normal operation or before 15 minutes of normal scheduled market closure, "trading hours for all stock exchanges would automatically get extended by one and half hours for that day, and the same would be intimated by the affected stock exchange to market participants, other MIIs and SEBI immediately but not later than 10 minutes from the occurrence of outage," the SOP said.

Subsequent to the communication from the affected stock exchange, the unaffected stock exchanges would also suitably issue a notice with regard to extension of trading hours on their stock exchanges, the regulator said.