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One can tighten the screws on exchanges for technology glitches by punishing SEBI management: Source

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The market regulator is planning to take stern action on exchanges, depositories and clearing corporations such as SEBI MII (Market Institutions Infrastructure) to make top management responsible for the technical glare on the trading platform by removing the flesh of a big pound. In its attempt to avoid a nuisance seen in February this year, the regulator may formalize a monetary disbursement at Rs 10 crore MII and if they fail to take a disaster recovery action within a specified time, their MD and There will be a 10% reduction in the salary of the CTO. .

A source close to the development was told that “SEBI has sent a letter to MII seeking comment to punish the top management in the event of mismanagement. This was a by the regulator on 22 February in the NSE And a part of the various steps taken to prevent the accident, in which many investors suffered heavy losses. ”

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The letter sent by the regulator to MII last week stated, “In case of delay in declaration of disaster beyond the said time limit specified by SEBI, financial disinvestment of Rs 10 crore will be done on MII. In addition, financial disruption will be imposed on the Managing Director (MD) and Chief Technology Officer (CTO) of MII, equal to 10% of their annual salary (both fixed and variable components) for that financial year. The amount of “Financial Disinfectant” realized as per the above structure will be deposited by MII to the Investor Protection and Education Fund administered by SEBI.

Earlier, SEBI had put disinfectant amount of Rs 50 lakh on the National Stock Exchange for a trenchant mess. Currently, there is no fixed amount for monetary fees, but it is now clear that the regulator wants to formalize it at a higher amount to avoid such accidents in the future.

SEBI intends to include these financial planning clauses at the time of the appointment of management and for this the provisions for the currently appointed officers would also have to be changed.
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SEBI has explicitly mentioned in the letter that “financial deterrent” will have effect “irrespective of any other action (s) initiated / taken by SEBI”.

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The letter further states that failure to declare a disaster within the stipulated deadline of 22 March 2021, 2221, mandates that in the event of dissolution of one or more of the ‘Critical Systems’, MII within 30 minutes Will happen. Declare that incident as a ‘disaster’. “

Following the technical glitch of the National Stock Exchange on 22 February, which failed to act quickly in disaster recovery, causing monetary losses to many investors, SEBI had issued new guidelines to deal with any such incident in future.
MII will have to form an Incident and Response Team (IRT) / Crisis Management Team (CMT), which will be headed by the Managing Director (MD) or Chief Technology Officer (CTO) of MII.

The Bombay Stock Exchange declined to comment. The National Stock Exchange, Multi Commodity Exchange, National Commodities Derivatives Exchange (NCDEX), Metropolitan Stock Exchange and SEBI did not respond to queries on Tuesday.

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