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Standard Operating Procedure for handling of technical glitches by Market Infrastructure Institutions (MIIs) and payment of “Financial Disincentives” thereof - SEBI - SEBI/HO/MRD1/DTCS/CIR/P/2021/590

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..... 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 specified downtime and for downtimes beyond such specified time, a pre-defined penalty structure is included in Service Level Agreement. 4. Considering the criticality of smooth functioning of systems of MIIs (as any disruption adversely impacts all classes of investors / market participants as well as the credibilit .....

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Standard Operating Procedure for handling of technical glitches by Market Infrastructure Institutions (MIIs) and payment of “Financial Disincentives” thereof - SEBI

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..... 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 August 06, 2019 to the MIIs having reference no. SEBI/HO/MRD/DOP1/OW/P/20062/7/2019 with regard to handling of technical glitches. Yours faithfully, Ansuman Dev Pradhan Deputy General Manager Division of Technology & Cyber Security Market Regulation Department +91-22-26449622 Email: ansumanp@sebi.gov.in ANNEXURE- I Standard Operating Procedu .....

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Standard Operating Procedure for handling of technical glitches by Market Infrastructure Institutions (MIIs) and payment of “Financial Disincentives” thereof - SEBI

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..... litch. (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 SEBI, after placing the same before the Standing Committee on Technology and the Governing Board of the MII and confirming compliance with their observations. (iv) RCA submitted by the MIIs should inter-alia include exact cause of the technical glitch (including root cause from vendor(s), if applicable), exact duration of the technical glitch, chronology of events, list of business processes/systems and time for which they were impacted, recommendations of SCOT / Governing Board of MII, details of corrective/ preventive measures taken (or to be taken) by MII .....

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Standard Operating Procedure for handling of technical glitches by Market Infrastructure Institutions (MIIs) and payment of “Financial Disincentives” thereof - SEBI

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..... dquo; of ₹ 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 Annexure- I of this Circular or any revised timeline specified by TAC/SEBI for submission of exact RCA. Failure to timely address technical glitch 2. In order to ensure that MIIs address technical glitch within the timeline specified by TAC/SEBI, the following progressive slab-wise “financial disincentive” shall be paid from the expiry of the timeline specified by TAC/ SEBI: S No. No. of working days during which failure continues (i.e. after expiry of the timeline specified by TAC/ SEBI) Financial disincentive to be paid by the MII (Rs.) i. First 15 working days 2 lakh per working day .....

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Standard Operating Procedure for handling of technical glitches by Market Infrastructure Institutions (MIIs) and payment of “Financial Disincentives” thereof - SEBI

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..... wing “financial disincentive” shall be paid: S No. Failure to restore operations within the RTO prescribed by SEBI Financial disincentive Equivalent (Rs.) i. Financial disincentive on MII 10% of average of standalone net profit for previous two financial years or ₹ 2 cr., whichever is higher. ii. Financial disincentive on MD and CTO of MII separately 10% each of their annual pay (both fixed and variable components) for the financial year when the disaster occurred “Financial disincentive” under Clause 3 and Clause 4 above, in relation to the same disaster, shall be paid only once either under Clause 3 or Clause 4. 5. Further, if an MII fails to restore operations of Critical Systems including from Disaster Reco .....

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Standard Operating Procedure for handling of technical glitches by Market Infrastructure Institutions (MIIs) and payment of “Financial Disincentives” thereof - SEBI

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..... i. Stock Exchange Investor Protection Fund (IPF) ii. Clearing Corporation Core Settlement Guarantee Fund (Core SGF) iii. Depositories Investor Protection Fund (IPF) 8. Further, the MII shall submit a compliance report within 90 days of occurrence of disaster/ business disruption to SEBI providing details of payment of “financial disincentives” including computation of “financial disincentives” as per the SOP and the date when the amount was credited to the aforementioned funds. With regard to “financial disincentive” on the MD/CTO of the MII arising out of the variable pay component, the compliance report shall be submitted within 30 days of determination of variable pay of the concerned officials for the .....

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Standard Operating Procedure for handling of technical glitches by Market Infrastructure Institutions (MIIs) and payment of “Financial Disincentives” thereof - SEBI

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