Sebi asks NSE to fix individual responsibilities for trading glitch

Regulator issues new guidelines for switching to backup sites

The Securities and Exchange Board of India (Sebi) on Monday directed the management of the National Stock Exchange (NSE) to fix individual responsibilities, and determine why it failed to shift operations to the disaster recovery site (DR) during the trading outage on February 24. The exchange has three weeks to complete the exercise.

Sebi also issued revised guidelines for moving to DR sites. It said: “Unannounced live trading session shall be conducted from the DR site of the market infrastructure institutions (MIIs) with a short notice of 45 minutes from Sebi before the start of the trading session, starting from July 2021.”

The NSE, on the other hand, has submitted its detailed root cause analysis (RCA) to Sebi’s technical advisory committee. “After trading halt on the NSE, we considered all the available alternatives on hand, including the invocation of DR, to decide on the course of action that would bring up the market at the earliest with least disruption to market participants, and post evaluation, a decision was taken to bring up the systems at the primary site. The NSE regularly tests its DR readiness in line with Sebi regulations, wherein quarterly drills are conducted and live trading sessions from the DR site are conducted twice a year,” NSE said in a press statement.

NSE has a primary data centre at its headquarters in Mumbai’s BKC. It also maintains a near disaster recovery (NDR) site nearby at Kurla and a disaster recovery (DR) site in Chennai.

The exchange also said due to digging and construction activities between the BKC and Kurla centres, there was instability in links from both its telecom services providers. This led to “unexpected behaviour” of the storage area network (SAN) system. Following this, the risk management system of the NSE Clearing and other systems become unavailable.

Sebi, in its new guidelines, said in an event of disruption at “critical systems”, the MII will have to declare the incident as “disaster” within 30 minutes, down from two hours allowed earlier. MIIs will have to take measures to restore operations, including from DR, within 45 minutes, as opposed to two hours earlier, from the declaration of “disaster”.

Sebi has also asked MIIs to ensure the failure of any subsystem will not impact other critical systems of and continuous functioning of the securities market.