The Technical Advisory Committee (TAC) appointed by Securities and Exchange Board of India (SEBI) has questioned the management of National Stock Exchange (NSE) about the reason for the Exchange's failure to shift operations to disaster recovery (DR) site from primary site on 24th February. 

 

On Monday, the TAC submitted its root cause analysis for the trading halt at NSE on 24 February 2021. 

 

The TAC says, SEBI been advised to ask the board of NSE to determine why the management failed to shift NSE's operations from primary site to DR site within the time frame specified by SEBI and fix individual responsibilities for it. NSE has been asked to complete this task within 21 days, a release from SEBI says.

 

Further, both NSE and NSE Clearing Ltd (NCL) are asked to implement within 90 days, functionality of updation of collaterals at the slave system of NCL placed at data centres of BSE and Metropolitan Stock Exchange of India (MSEI) and connect trading system at primary site of NSE to the slave system of NCL placed at data centres of BSE and MSEI.   

 

After due deliberations, TAC says from April 2021, it has decided to conduct unannounced live trading session from DR site of the market infrastructure institutions (MIIs) with a notice of four hours from SEBI before the start of the trading session.

Further, from July 2021, unannounced live trading session would be conducted from DR site of the MIIs with a short notice of 45 minutes from SEBI before the start of the trading session.

TAC says, "In the event of disruption in the 'critical systems' of the MII, the MII shall, declare that incident as 'disaster' within 30 minutes of incident from earlier two hours and take measures to restore operations including from DRS within 45 minutes as against two hours stipulated earlier from the declaration of 'disaster'."

TAC also asked MIIs to feasibility of intra-day shifting to DR site from primary site with a notice of 45 minutes from SEBI. "MIIs should prepare comprehensive testing plan and build sufficient redundancy in its systems in order to mitigate impact of any unforeseen technical glitch and to ensure failure of any subsystem of MIIs would not impact other critical systems of MIIs and continuous functioning of securities market. MIIs should constantly monitor the health and performance of various communication links and take corrective measures, as required," it added.

SEBI has also issued circular, on 22 March 2021, that says the recovery time objective (RTO), the maximum time taken to restore operations of critical systems from DRS after declaration of disaster, of 45 minutes. 'Critical systems' for an exchange and clearing corporation include trading, risk management, collateral management, clearing and settlement and index computation. 'Critical systems' for a depository would be systems supporting settlement process and inter-depository transfer system.

Recovery point objective (RPO), the maximum tolerable period for which data might be lost due to a major incident, has been reduced to 15 minutes from the existing 30 minutes.

SEBI says, "All MIIs have to incorporate clear and comprehensive communication protocols and procedures in business continuity plan (BCP) document for both internal and external communications from the time of incident till the rectification or resumption of systems and trading of MIIs."