Market regulator Securities and Exchange Board of India (SEBI) will constitute a dedicated working group to examine recurring technical glitches at stock
and commodity exchanges and chart out a roadmap for strengthening exchange technology over the next decade, SEBI Chairperson Tuhin Kanta Pandey said. Speaking to ET NOW, Pandey said SEBI takes every technical failure at exchanges “extremely seriously” and follows a strict standard operating procedure (SOP) whenever such incidents occur. Exchanges are required to submit a root cause analysis within a stipulated number of hours, failing which they face stiff penalties. “There is an SOP in place. If glitches go beyond acceptable limits, there are penalties. Every incident undergoes a detailed root cause analysis and we examine whether there is any commonality across different glitches,” Pandey said. He added that SEBI is not limiting its review to individual incidents alone, but is increasingly focusing on identifying systemic issues that could pose risks to market integrity. The regulator is analysing patterns across glitches to understand vulnerabilities in exchange infrastructure and assess how technology can be made more secure and resilient. As part of this effort, SEBI will set up another working group to define the next technological frontier for Indian exchanges. This group will assess global best practices and benchmark Indian market infrastructure against leading international exchanges. “We are going to constitute a working group to look at what should be the technological roadmap for exchanges for the next five years or even the next ten years. The idea is to benchmark with the best in the world or evolve newer methods altogether,” the SEBI chief said. Pandey also noted that technology failures are not unique to India and have been reported at major global exchanges as well. SEBI closely tracks similar incidents in other jurisdictions, including those at prominent exchanges such as the CME in the United States, to draw lessons and improve domestic safeguards. “Glitches sometimes happen due to broader technological changes across jurisdictions. We study why they occurred elsewhere and what lessons can be learnt from those experiences,” he said. In a related development, Pandey confirmed that discussions are progressing on allowing institutional investors such as banks, insurance companies and pension funds to participate in non-agricultural commodity derivatives. However, he did not indicate a specific timeline for the proposed move.
The steps come amid heightened scrutiny of exchange infrastructure, as market volumes rise and dependence on high-speed, technology-driven trading systems continues to grow. SEBI’s move is aimed at ensuring market stability while preparing exchanges for future technological demands.
