Business Continuity Planning (Exchanges)
Business Continuity Planning (BCP) for stock exchanges, clearing corporations and depositories is a SEBI-mandated framework requiring these Market Infrastructure Institutions to maintain the capacity to sustain critical market operations during a disaster, system failure or other disruptive event with minimal downtime.
SEBI's regulatory requirements for BCP in MIIs stem from their critical role in financial market infrastructure. Any prolonged outage at a major exchange like NSE or BSE, or at NSCCL, ICCL or CDSL/NSDL, could prevent settlement of billions of rupees in transactions and undermine investor confidence. Accordingly, SEBI has mandated comprehensive BCP frameworks covering primary data centres, disaster recovery sites and crisis management protocols.
Each MII must operate a primary data centre (PDC) and a disaster recovery site (DRS), both meeting defined standards of physical security, power redundancy, network connectivity and latency. The DRS must be located at a prescribed minimum geographical distance from the PDC to ensure that a localised disaster such as an earthquake, flood or fire does not simultaneously incapacitate both sites. NSE's primary data centre is in Mumbai, with its DR infrastructure at a geographically separate location.
SEBI requires MIIs to conduct regular BCP drills, including full failover tests from the PDC to the DRS, at defined intervals. Test results and audit reports must be submitted to SEBI. The objective is to demonstrate that the DRS can take over all critical market functions within a Recovery Time Objective (RTO) and that data loss is within a Recovery Point Objective (RPO) specified by SEBI.
Incident management protocols define escalation procedures, communication templates for the market, regulatory notifications and internal crisis management authority. MIIs must maintain incident response teams available on a twenty-four-seven basis and conduct scenario-based drills including ransomware attacks, network failures, power outages and physical security breaches.
For brokers and trading members connected to the exchange infrastructure, BCP also implies maintaining their own redundant connectivity and risk systems. Exchange-level BCP standards have a direct bearing on the reliability that market participants can expect from the trading infrastructure, which in turn affects the risk model for algo trading strategies that depend on continuous, low-latency access to market systems.