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Informist, Monday, Jun. 22, 2026

 

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--SEBI issues consultation paper on trading tech provisions for mkt infra cos
--SEBI proposes ease of doing business norms for mkt infra entities
--SEBI proposes modifications to master circular for bourses, clearing corp
--SEBI mulls trading software related tweaks to commodity F&O master circular
--SEBI mulls changes to IT related provisions of depositories master circular

 

MUMBAI - The Securities and Exchange Board of India issued a consultation paper Monday containing 77 proposals on changes to existing information technology and trading software provisions of master circulars for market infrastructure institutions such as stock exchanges, clearing corporations, and depositories. The proposals cover deletion of provisions due to redundancy or obsolescence, rationalisation and simplification of provisions, reduction of select certifications or processes for ease of doing business, and extending scope or flexibility in provisions.

 

The proposals also cover merger of certain provisions in two master circulars -- for exchanges and clearing corporations, and for commodity derivatives. The market regulator has invited public feedback on the proposals by Jul. 13, specifically asking whether the changes proposed pose any risks, and if so, what safeguards can be introduced to protect against these risks, and whether there are any discrepancies with respect to the merger related proposals.

 

Among key proposed changes, SEBI wants to delete from the master circular for exchanges and clearing corporations the provision on specific order level risk controls for algorithmic trading, because it believes that these checks are covered in another provision of the same circular.

 

Further, SEBI proposed diluting a key provision in the master circular for commodity derivatives pertaining to an important prerequisite of liquidity for allowing algorithmic trading in mini and macro contracts. SEBI indicated in the consultation paper that this was sought for by the stock exchanges who claimed that algorithmic trading as a tool improved the market depth and liquidity in a contract, and was subject to checks and controls such as order per second, order to trade ratio monitoring, daily price limits, and restriction of specific type of orders. The markets regulator, however, has made the dilution proposal subject to the condition that allowing algorithmic trading in these contracts would not put small participants at disadvantage. 

 

 

In another important aspect pertaining to disaster recovery preparedness of stock exchanges, SEBI proposed that the current requirement of once-a-quarter disaster recovery site drill need not be carried out in the quarter when the stock exchange is conducting live trading session from the disaster recovery site to comply with the current requirement of doing live trading from the site for at least two consecutive days once in every six months.

 

At the urging of the market infrastructure institutions, SEBI has proposed cutting the frequency of the review of the policy on business continuity plan and disaster recovery to once a year from one in every six months.

 

The market regulator has also submitted to a push from stock exchanges to allow for vendors procuring colocation racks to provide only the hardware infrastructure to the broker clients instead of a complete solution encompassing both hardware infrastructure and trading software applications as is currently required. This, according to SEBI, will give flexibility to brokers to install their own algo software applications on the racks they take from the colocation vendor.  End

 

Reported by Rajesh Gajra

Edited by Akul Nishant Akhoury

 

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