Sebi proposes sweeping revamp of technology rules for stock exchanges

Capital markets regulator Sebi has proposed a comprehensive overhaul of the technology and cyber security framework governing stock exchanges, clearing corporations and depositories, with the aim of simplifying regulations, removing overlaps and strengthening cyber resilience.

In a consultation paper issued on Sunday, the regulator proposed consolidating multiple circulars and master circulars into a simpler framework while aligning legacy rules with the Cyber Security and Cyber Resilience Framework (CSCRF). Public comments have been invited until July 13.

One of the key proposals is to merge technology-related provisions applicable to market infrastructure institutions (MIIs), including stock exchanges, clearing corporations and depositories, into a consolidated circular covering annual system audits, cyber security, business continuity planning, disaster recovery and capacity planning.


Sebi has also proposed removing several outdated or overlapping provisions from the Master Circular for Stock Exchanges and Clearing Corporations (MSECC), saying these requirements are already covered under the newer CSCRF. These include provisions relating to cyber crisis management plans, vulnerability assessments, data encryption, cyber resilience testing and security operations centres.

To improve ease of doing business, the regulator has suggested allowing vendors in exchange co-location facilities to provide either hardware or software services, instead of mandating end-to-end solutions. The change is intended to provide trading members greater flexibility, lower costs and more choice in selecting service providers.

The consultation paper also proposes rationalising provisions relating to algorithmic trading by bringing together rules on order-to-trade ratio penalties, algorithm tagging and software testing under a single section.

On capacity planning, Sebi has proposed harmonising the framework across exchanges, clearing corporations and depositories. Under the revised framework, market infrastructure institutions would be required to take immediate action if utilisation of any IT component exceeds 75% of installed capacity, while depositories would have to act if utilisation remains above the threshold for 15 days on a rolling basis.

The regulator has also proposed merging technology provisions applicable to commodity derivatives exchanges with those governing equity exchanges, creating a more uniform regulatory framework across market segments.

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Sebi said the exercise is aimed at simplifying regulations, reducing duplication, ensuring consistency across different market infrastructure institutions and strengthening the overall resilience of India's securities market infrastructure. Public comments on the proposals can be submitted through Sebi's website until July 13, 2026.

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