A framework to deal with tech glitches

The Securities and Exchange Board of India (Sebi) has put out a framework to deal with technical glitches in the trading systems of stockbrokers.

The proposed measures include new reporting requirements, capacity planning, software testing, monitoring mechanisms, business continuity planning and disaster recovery site.

"Considering the growing number of such incidents, Sebi constituted a working group to recommend suitable measures to address the issue," Sebi said in a circular on Friday.

"Based on the recommendations of the working group and views obtained from stakeholders and industry experts, it has been decided to put in place the framework."

Sebi has defined technical glitch as any malfunction in the systems of stockbrokers, including in its hardware, software, networks, processes or any products or services provided by the stockbroker in electronic form.

The malfunction could be on account of inadequate infrastructure, cyberattacks, procedural errors and omissions, or process failures, in their own systems or the one outsourced from any third parties which may lead to either stoppage, slowing down or variance in the normal operations of systems of the stockbroker for a contiguous period of five minutes or more.

India's capital markets regulator said stockbrokers should inform stock exchanges about the technical glitch immediately but not later than one hour from the time of occurrence of the glitch.

Brokers should also submit a preliminary incident report to the exchange within a day of the incident. The report shall include the date and time, the details, and effect of the incident as well as the immediate action taken to rectify the problem, Sebi said.