SEBI announces interoperability for stock exchanges from 1 April 2025

The Securities and Exchange Board of India (SEBI) on Thursday announced the interoperability of stock exchanges to ensure business continuity in the face of a technical glitch or an outage. The interoperability for cash, derivatives, currency derivatives, and interest rate derivatives will be effective from April 1, 2025.

  Upon discussion with exchanges, it has been decided that, to begin with, the NSE would act as an alternative trading venue for the BSE and vice-versa, said SEBI.

Stock exchanges have been directed to issue a standard operating procedure (SOP) regarding it in the next two months.

Traders would be able to hedge their open positions by taking offsetting positions in identical or correlated indices on other exchanges, said SEBI.

As these segments are interoperable, taking offsetting positions in other trading venues would net off such open positions for end clients and release the margin. Hence, no separate treatment is required for such a category of products, said a circular.

For scrips that are exclusively listed on one exchange, the other exchanges may create reserve contracts to be invoked at the time of an outage on the other exchange. 

In case the exchange does not have a highly correlated index derivatives product available on the other index, then the exchange may consider creating such an index and introducing derivatives contracts on the same. This would provide an avenue to hedge positions in index derivatives products in case of an outage.

For instance, the NSE has derivatives contracts of Nifty Financial, Nifty Midcap Select, and Nifty Next 50, while the BSE does not have correlated index derivatives for the same.

According to the mandate, in case of an outage, the exchanges would have to intimate SEBI within 75 minutes of the occurrence and invoke the business continuity plan. The alternative trading venue would be invoked within 15 minutes of such intimation.

www.business-standard.com, dt. 29-11-2024