SEBI has issued a consultation paper proposing new disaster recovery rules for stock exchanges, clearing corporations, and depositories. The plan includes mandatory four-hour drills on non-working days and revised IT capacity norms for commodity segments. These changes aim to improve system stability during extended trading hours, with public comments invited until October 5, 2026.
The Securities and Exchange Board of India (SEBI) has released a consultation paper to update how stock exchanges, clearing corporations, and depositories handle technical failures. These organizations, collectively known as Market Infrastructure Institutions (MIIs), are the backbone of the Indian financial market, and their technical reliability is critical for smooth trading.
The core proposal is to shorten mandatory Disaster Recovery (DR) drills from a full trading day to at least four hours. Currently, these institutions are often required to conduct exhaustive tests that can disrupt operations. The new framework suggests that these drills must take place on non-working days, simulating a complete switch from the primary data center to a secondary disaster recovery site. This ensures that in the event of a real technical failure, the transition to backup systems is fast and seamless.
This shift in policy is partly in response to the operational realities of commodity derivative segments, where trading hours extend as late as 11:55 PM. Such late-night operations make standard maintenance and system updates difficult. By refining the recovery protocols, the regulator aims to reduce the risk of downtime that could prevent investors from executing trades or managing their positions.
Another significant change is the proposal to reduce the required IT system capacity for commodity exchanges and clearing corporations. SEBI has suggested lowering the mandate from four times the projected peak load to two times. This change is intended to ease the technical compliance burden on these entities, helping them better manage their capital spending on IT infrastructure.
For investors, these regulations are designed to lower the systemic risk of trading halts, which can be a major source of anxiety during periods of high market volatility. A failure in any one part of the market infrastructure could potentially affect the entire financial ecosystem. By standardizing how these organizations handle their data and switch to backup systems, the regulator is attempting to build more resilient institutions.
However, these upgrades come with challenges for the institutions involved. Maintaining high-grade, cyber-resilient technology is expensive and requires continuous investment. Additionally, MIIs must balance these technical requirements with the operational cost of maintaining secondary sites that are rarely used. There is also a constant need for specialized talent to manage these complex systems, which remains a hurdle for many firms in the sector.
The proposed framework is open for public comments until October 5, 2026. After evaluating industry feedback, SEBI is expected to finalize the guidelines, which will likely lead to updated compliance standards for all stock exchanges and depositories in the country.