Sebi sends notices to NSE, bourse executives for trading halt on Feb 24

The Securities and Exchange Board of India (Sebi) has issued show-cause notices to the National Stock Exchange and some NSE employees for a hardware failure that halted trading at India’s largest bourse on February 24.

“Sebi has issued a show cause notice on August 11, 2021 to NSE and some of its employees alleging non-compliance with certain paragraphs of Sebi circular dated October 8,2015, September 13,2017, March 26, 2019 and Regulation 12(6) read with Regulation 7(3)(a) and 7(3)(c) of SECC Regulation 2018. In this regard, the company has taken necessary remedial actions and has also made necessary filing with Sebi, response for which is awaited,” the exchange has said in a disclosure.

“In February 24, 2021, NSE’s trading system was halted due to certain issues in the links with telecom service providers which in turn impacted the Storage Area Network (SAN) system of the Company, resulting in the primary SAN becoming inaccessible to the host servers. This also resulted in the risk management system of NSE Clearing and other systems such as clearing and settlement, index and surveillance systems becoming unavailable,” the exchange has said.

Sebi, in March, asked NSE’s management to fix individual responsibilities and determine why it failed to shift operations from its primary site to the disaster recovery site (DR).

NSE submitted a reported on the incident to Sebi and paid a penalty of Rs 25 lakh in July.

Following the incident at NSE, Sebi issued a framework to penalise market infrastructure institutions (MIIs), which includes stock exchanges, depositories and clearing corporations, for technical glitches.

Under the new framework, MIIs will have to pay Rs 100,000 per day in case of a delay in submission or incomplete submission of RCA. The framework allows up to 21 days for submission of a comprehensive RCA report.