Sebi issues guidelines for stock exchanges to handle outages, extension of trading hours

In the event of disruption of trading in one or more market segments of affected stock exchange, qualifying as outage, trading in other unaffected segments of the exchange would continue.

Sebi issues guidelines for stock exchanges to handle outages, extension of trading hours Pic: Pixabay

Sebi on Monday came out with a standard operating procedure (SOP) asking stock exchanges to inform about trading disruptions to stakeholders within 15 minutes from such occurance and extending trading time by one-and-a-half hours in certain outage conditions. The move came amid instances of technical snags impacting the overall trading system.

"If due to any technical reason or otherwise, continuous trading on stock exchanges is disrupted, it is of paramount importance that not only all market participants including other MIIs are promptly informed about the outage but also the trading hours are extended, if required, so as to provide opportunity for smooth closure of intraday positions," Sebi said in a circular.

Under the SOP, stock exchange that suffered the outage will have to intimate about the outage to various stakeholders such as market participants, trading members and other market infrastructure institutions (MIIs) within 15 minutes from occurrence of an outage through broadcast message and by publishing on its website.

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Besides, the exchange will have to inform the same to Sebi through a dedicated email.

Further, the affected stock exchange would update about the ongoing outage in the time intervals of 45 minutes from the initial intimation, until normalcy to operations is restored.

In the event of disruption of trading in one or more market segments of affected stock exchange, qualifying as outage, trading in other unaffected segments of the exchange would continue.

Affected stock exchange would restore operations to normalcy at the earliest including from the Disaster Recovery Site and carry out various activities.

Further, a pre-opening session similar to normal pre-opening session would be conducted for effective price discovery, before resumption of trading. Moreover, there would be an advance intimation of at least 15 minutes to various market participants with regard to resumption of trading or start of pre-opening session, as applicable.

With regard to extension of trading hours, Sebi said in case trading on the affected stock exchange resumes to normalcy at least one hour before the normal scheduled market closure, trading hours on that day for all stock exchanges would remain unchanged.

In case trading on the affected exchange does not resume to normalcy even one hour before the scheduled market closure, trading hours for all stock exchanges would automatically get extended for additional one-and-a-half hours for that day .

If trading on the affected stock exchange does not resume to normalcy even 45 minutes post normal scheduled market closure, in the case of extension of trading hours, no further trading would be allowed on the affected stock exchange for that day and other stock exchanges would continue to operate till the extended time to enable smooth settlement of intraday positions.

Earlier, the Securities and Exchange Board of India (Sebi) had extended trading hours on February 24 on all stock exchanges -- NSE, BSE and MSEI-- following the trading halt on the NSE due to technical issues.

The regulator has asked exchanges to put in place 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 last half-an-hour of trading for the day due to outage.

"Extension of trading hours, if any, for cash market would result in equivalent extension of trading hours in equity derivative segment and vice versa, provided trading hours at the start of the day are aligned for both cash market and equity derivative segment," Sebi said.

Further, extension of trading hours in the cash market would also result in equivalent extension to other secondary market mechanisms conducted during trading hours such as offer for sale, buy back etc, it added.

Stock exchange outage means stoppage of continuous trading, either suo moto by exchange or by virtue of reasons beyond control of stock exchange.

Further, stoppage of continuous trading will not include trading halt on account of index based market-wide circuit breaker.

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