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

In a statement, Sebi said, “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.”

Outage intimation: 

Thereby, to ensure any outage at stock exchanges is handled in a harmonized manner, Sebi has directed stock exchanges to report to market participants/trading members/other MIIs about the outage immediately but not later than 15 minutes from occurrence of outage.

Exchanges should report the outage to Sebi through their dedicated email address.

Also, Sebi has asked exchanges to update about the ongoing outage in time intervals of 45 minutes from the initial intimation until normalcy to operations is restored.

Extension in trading hours: 

Further, in regard to the extension of trading hours, Sebi said, “if applicable…shall be mentioned in the intimation by the affected stock exchange.”

According to the Sebi’s circular, if the affected stock exchange resumes to normalcy at least one hour (excluding 15 minutes of pre-opening session, if applicable) before the normal scheduled market closure — then trading hours on that day will remain unchanged.

However, if the affected exchange does not resume normalcy even one hour before the scheduled closing then trading hours for all stock exchanges would automatically get extended by one and a half hours for that particular day when the outage occurred.

Market hours will be extended by one and a half hours for that respective day even when the outage happens during the last trading hour of normal operation and latest before 15 minutes of normally scheduled market closure. In such cases, the affected exchange should intimate about the outage immediately but not later than 10 minutes from the time of occurrence to the investors. A notice is to be issued by other stock exchanges as well for the extension in trading hours.

The extension in trading hours should be intimated to market participants, other MIIs, and SEBI latest by one hour fifteen minutes before the market closure.

Also, Sebi has directed that in case of an extension of trading hours, if the affected stock exchange does not attain normalcy even 45 minutes post-normal scheduled market closure — then no further trading will be allowed in the affected exchange, however, other exchanges can continue to operate till the extended time period.

Other details: 

Additionally, the regulator has guided that a re-opening session similar to a normal pre-opening session would be conducted for effective price discovery, before the resumption of trading.

Furthermore, exchanges shall make an advance intimation of at least 15 minutes to various market participants with regard to the resumption of trading or the start of the pre-opening session, as applicable.

Notably, in case of disruption of trading in one or more market segments of the affected stock exchange, qualifying as an outage, Sebi directed that trading in other unaffected segments of the affected exchange shall continue and all other unaffected exchanges shall continue to trade in all of their market segments.

Sebi has asked exchanges to restore operations to normalcy at the earliest including from the Disaster Recovery Site and carry out various activities, in terms of Sebi directions.

It needs to be noted that trading hours are pre-defined for stock exchanges and are known to all market participants including the other Market Infrastructure Institutions (MIIs) to enable them to carry out activities related to continuous trading in securities.

The announcement comes after exchanges like NSE faced technical disruption in the past which led to impacting overall trading.

Sebi has asked exchanges to put in place a common close-out policy, within 30 days of the SOP circular.

Also, MIIs are asked to update their BCP document after the instant circular and submit the same to SEBI subsequent to approval of their Governing Boards within 2 months of the date of this circular.