NSE and BSE Implement Robust Backup System for Enhanced Risk Management
In a significant advancement for risk management, the clearing corporations of the National Stock Exchange (NSE) and BSE Ltd have developed a resilient 'fridge-like' backup system. This was revealed by Madhabi Puri Buch, the Chairperson of the Securities and Exchange Board of India (SEBI), at an SBI Mutual Fund event on July 19.
NSE Clearing Ltd, the clearing corporation for NSE, and Indian Clearing Corporation Ltd, for BSE, have collaborated on this innovative system. According to Buch, if the risk management system of one clearing corporation fails, the system of the other corporation will immediately take over, ensuring seamless operation.
Buch used a relatable analogy to explain this system. She compared it to how, in the past, if a refrigerator at home stopped working, people would ask their neighbors to store perishable items to prevent spoilage. Similarly, NSE and BSE have set up a backup system to support each other in case of technical glitches.
"The primary aim of this backup system is to ensure that real-time transactions for investors continue without interruption," Buch stated.
Impact of Global Cybersecurity Issues
On the same day, a significant disruption was caused by software updates from American cybersecurity firm CrowdStrike, affecting Microsoft Windows services globally. This led to the notorious “Blue Screen of Death” error on numerous computers, disrupting operations in various sectors, including aviation, banking, and brokerage firms.
Users of brokerage apps like Angel One, 5Paisa, and IIFL Securities reported issues with market orders not going through due to these glitches.
Concerns Over Futures and Options (F&O) Trading
Buch also addressed the surge in volumes of futures and options (F&O) trading. She highlighted that SEBI’s concerns have evolved from a micro-level, focusing on the potential risks to individual investors, to a macro-level, considering the broader economic implications.
"The scale of F&O trading has reached a point where we need to reconsider its impact on the market. It raises questions about whether our market is designed to facilitate such high levels of speculative transactions," Buch remarked.
By developing robust risk management systems and addressing broader market concerns, SEBI aims to ensure the stability and integrity of India's financial markets, safeguarding both individual investors and the economy at large.
Source: https://www.moneycontrol.com/news/business/markets/clearing-corporations-of-nse-bse-have-fridge-like-backup-for-risk-management-sebis-madhabi-buch-12773440.html