- By Aditya Pratap Singh
- Fri, 29 Nov 2024 09:12 AM (IST)
- Source:JND
SEBI New Rule: Equity market regulator Sebi on Thursday, took measures to guarantee seamless trading during technical glitches, particularly in interoperable sectors like equities, derivatives, and stock exchange currency markets. The measures aim to strengthen the stock exchange's business continuity and disaster recovery mechanisms.
Sebi said that, under these provisions, for similar or linked products—single stock derivatives, index derivatives—participants may hedge their positions on another exchange at the time of divergence. The margin for such positions will be netted off.
In addition, the exchanges must create "reserve contracts" for stocks or derivatives exclusively listed on an exchange to ensure continuity during disengagement.
Also, exchanges lacking correlated index derivatives must consider creating such indexes and introduce correlation agreements to offer hedging options. The impacted exchange has been ordered to alert Sebi and alternative exchanges within 75 minutes of the power outage. The options exchange will activate its continuity plan within 15 minutes of receiving this information.
To begin with, the NSE will serve as a backup trading venue for the BSE and vice versa. The two exchanges will jointly create a Standard Operating Procedure (SOP) that outlines responsibilities, procedures, and required system updates.
The SOP must be submitted to Sebi within 60 days. The new system, which will take effect on April 1, 2025, aims to increase investor protection and maintain the smooth operation of the markets during unforeseen disruptions.
(With PTI's Inputs)
