SEBI unveils SOPs for the handling of Stock Exchange Outage & extension of trading hours

Circular No. SEBI/HO/MRD-TPD-1/CIR/P/2023/7, Dated 09.01.2023

SEBI recently discussed with Market Infrastructure Institutions (MIIs) about outages at stock exchange(s) to be handled in a harmonized and consistent manner and the Standard Operating Procedure with regard to the handling of such stock exchange outages in the Cash Market and Equity Derivatives segment was issued.

What is a Stock Exchange outage?

Stock Exchange Outage means stoppage of continuous trading, either suo-moto by exchange or by virtue of reasons beyond the control of the stock exchange. Further, stoppage of continuous trading shall not include a trading halt on account of the index-based market-wide circuit breaker.

Timeline for the necessary communications

Communication of such outages by exchanges to be made within 15 mins to all market participants. Whereas, SEBI must be informed as soon as an outage occurs. The affected stock exchange shall update about the ongoing outage in time intervals of 45 minutes from the initial intimation.

No extension where the stock exchange resumes normalcy within an hour after the outage

Trading hours on that day for all stock exchanges would remain unaltered if normal trading on the affected stock exchange restarts at least an hour (excluding the 15 minutes of the pre-opening session, if applicable) before the regularly scheduled market close.

One and half hour extension where the stock exchange doesn’t resume normalcy even one hour before the scheduled closure

Trading hours for all stock exchanges will automatically be extended by an additional one and a half hours for that day if trading on the affected stock exchange does not resume to normalcy even one hour (excluding 15 minutes of the pre-opening session, if applicable) before the scheduled market closure.

No extension where the stock exchange doesn’t resume to normalcy even 45 minutes before the scheduled closure

Where, Trading on the affected stock exchange does not resume to normalcy even 45 minutes (excluding 15 minutes of the pre-opening session, if applicable) post normal scheduled market closure, in the case of an extension of trading hours, no further trading would be allowed on the affected stock exchange for that day and other stock exchanges would continue to operate till the extended time provided above, to enable smooth closure/settlement of intraday positions.

One and half hour extension where stock exchange doesn’t resume to normalcy even 15 minutes before scheduled closure

If the occurrence of an outage, happens during the last trading hour of normal operation and the latest before 15 minutes of normally scheduled market closure, trading hours for all stock exchanges would automatically get extended by one and a half hours for that day.

Extension of trading hours in the Equity Derivative Segment

Extension of trading hours for Cash Market would result in an equivalent extension of trading hours in Equity Derivative Segment and vice versa, provided trading hours at the start of the day are aligned for both Cash Market and Equity Derivative Segment.

The affected stock exchange would restore operations to normalcy at the earliest including from the Disaster Recovery Site and carry out various activities. Also, a pre-opening session similar to a normal pre-opening session would be conducted for effective price discovery, before a resumption of trading. The board also prescribed a number of other items.

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