TaxTMI 
TaxTMI 
Standard Operating Procedure for handling of technical glitches by Market Infrastructure Institutions (MIIs) and payment of “Financial Disincentives” thereof
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....rovide infrastructure necessary for the smooth and uninterrupted functioning of the securities market. 2. With increasing dependence on technology, as the operations and functioning of MIIs are fully automated right from order entry to order matching to trade confirmation leading up to clearing and settlement of trades, the instances of technical glitches at MIIs, leading to business disruption/unavailability of services provided by MIIs, have been occurring, despite various mechanisms stipulated by SEBI such as Business Continuity Planning, Disaster Recovery policies, System Audit etc. 3. The general practice in the computing/technology industry to deal with business disruption/unavailability of services, is to work with ....
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.... Disincentives", when triggered automatically under pre- defined conditions, as detailed in Annexure-II of this Circular, shall be credited to the Investor Protection Fund / Core Settlement Guarantee Fund maintained by the MII. 7. This circular is being issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market. 8. This circular is available on SEBI website at www.sebi.gov.in under the categories "Legal Framework" and "Circulars". 9. This circular shall come into effect from August 16, 2021 and shall supersede the SEBI directions dated....
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....regard to incidents resulting in business disruption, the following shall be submitted by the MIIs to SEBI: (i) Information of technical glitch on immediate basis but not later than 2 hours from the time of occurrence of the glitch; provided that glitches of the nature of a disaster- as defined in SEBI Circular dated March 22, 2021 having reference number SEBI/HO/MRD1/DTCS/CIR/P/2021/33 - shall be reported immediately upon declaration of disaster. (ii) Preliminary report within 24 hours of the occurrence of the glitch. (iii) Comprehensive Root Cause Analysis (RCA) report and corrective action taken to address the technical glitch within 21 days of the incident. Such report shall be submitted to S....
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....dequate, then, based on the recommendations of TAC, the MII shall be required to address the technical glitch by taking appropriate corrective actions, within the timeline specified by TAC/SEBI. While deciding such timeline, criticality of the malfunction and/or the services/ applications affected by the same shall also be taken into consideration. ANNEXURE- II "Financial Disincentive" structure with regard to handling of technical glitches Failure to timely submit RCA 1. In case of delay in submission or submission of incomplete/ inadequate RCA by an MII, a "financial disincentive" of Rs. 1,00,000 per working day shall be paid by the MII for each working day of delay from the timeline specified at Para 2.1(iii) of Annexur....
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....I 10% of average of standalone net profit for previous two financial years or Rs. 2 cr., whichever is higher. ii. Financial disincentive on Managing Director (MD) and Chief Technology Officer (CTO) of MII separately 10% each of their annual pay (both fixed and variable components) for the financial year when the disaster occurred Failure to restore operations within Recovery Time Objective (RTO) 4. In the event of a disaster, if an MII fails to restore its operations within the RTO prescribed by SEBI, i.e. to restore operations of 'Critical Systems' including from Disaster Recovery Site within 45 minutes of declaration of Disaster, the following "financial disincentive" shall be paid: S No. Fa....
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....t being in the nature of a Disaster 6. In the event of any business disruption, which is not required to be declared as "Disaster" as per SEBI circular dated March 22, 2021 having reference number SEBI/HO/MRD1/DTCS/CIR/P/2021/33, if an MII fails to restore normalcy of operations within 75 minutes of the incident, the following slab wise "financial disincentive" shall be paid by the MII: S No. Failure to Restore normalcy within Financial disincentive (Rs.) i. 75 minutes to 3 hours of the incident Rs. 50 lacs ii. Beyond 3 hours of the incident Rs. 1 crore 7. The amount of "financial disincentive" paid as per the above structure shall be credited by MII to the following funds ma....