SEBI Approves NSE-BSE Trading Backup: Enhancing Market Resilience

The Securities and Exchange Board of India (SEBI) has authorized the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) to serve as alternative trading platforms for one another in the event of an outage. This interoperability across segments such as cash, derivatives, currency derivatives, and interest rate derivatives will come into effect on April 1, 2025.

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As per SEBI’s circular issued on November 28, the initiative will initially enable the NSE to act as a backup for the BSE and vice versa. Both exchanges are required to draft a joint Standard Operating Procedure (SOP) within 60 days, outlining the necessary steps, coordination mechanisms, and roles during an outage. The SOP must also address any adjustments to the systems of stockbrokers and clearing corporations to ensure seamless execution.

SEBI emphasized that traders would have the flexibility to hedge their open positions by taking offsetting positions in identical or correlated indices on the alternative exchange. The interoperability of segments will allow open positions to be netted off, releasing margins without requiring additional measures for these products.

For securities exclusively listed on one exchange, reserve contracts can be created by the alternate exchange to activate during outages. Exchanges are also encouraged to introduce highly correlated index derivative products if such offerings are unavailable, facilitating position hedging during disruptions.

In the event of an outage, the affected exchange must notify SEBI within 75 minutes and activate its business continuity plan. The alternate trading platform must be operational within 15 minutes of such notification. Exchanges must also report the initiation of the continuity mechanism to both SEBI and the alternate exchange within the specified timeframe.

This interoperability framework aims to enhance market resilience and ensure uninterrupted trading even during unforeseen disruptions.

The stock market experienced significant losses today as benchmark indices Sensex and Nifty dropped sharply, shedding nearly 1.50%. The decline was driven by heavy selling in major stocks like Infosys, Reliance Industries (RIL), and HDFC Bank, compounded by a mixed global market trend. Weak investor sentiment was further fueled by sharp losses in IT, auto, and consumer durable sectors, along with escalating geopolitical tensions.

The BSE Sensex fell by 1,190.34 points (1.48%) to close at 79,043.74, after hitting an intraday low of 78,918.92, marking a total drop of 1,315.16 points (1.63%) at its worst. Investors saw a significant erosion in market capitalization, with wealth declining by ₹1,50,265.63 crore to ₹4,42,98,083.42 crore. Meanwhile, the NSE Nifty slid 360.75 points (1.49%) to end at 23,914.15.