SEBI Proposes Shorter Four-Hour Disaster Recovery Drills For Market Infrastructure Institutions

Capital markets regulator SEBI on Tuesday proposed reducing the minimum duration of disaster recovery (DR) drills for market infrastructure institutions (MIIs) to four hours from the existing requirement of a full trading day. The proposal is part of measures aimed at strengthening business continuity planning, operational resilience and data recovery mechanisms across stock exchanges, clearing corporations and depositories.

Under the proposed framework, DR drills would be conducted on a non-working day, with operations initially carried out from the primary data centre (PDC) before being switched over to the disaster recovery site (DRS). SEBI said the overall session should run for at least four hours, including the time required for the switchover. The regulator said the shorter duration could make such exercises easier for MIIs and market participants, particularly in commodity derivatives where some products continue trading until 11:55 p.m.

Although the duration would be reduced, SEBI proposed that the drills should replicate market operations as closely as possible. MIIs would be expected to simulate real-life loads and participation levels and test a range of disruption scenarios during the PDC-to-DRS switchover. A comprehensive list of scenarios would be prepared and reviewed by the Standing Committee on Technology (SCOT) of the respective institutions.

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The proposed framework also seeks stronger stress and mock testing at the primary site. Such exercises would cover transaction volumes and orders per second, along with masters, database table sizes and other non-transactional components. MIIs would also periodically test the fault tolerance of their primary and disaster recovery systems, ensuring that redundant components can automatically take over if critical equipment such as servers or switches fails.

SEBI further proposed that MIIs identify and monitor system boundary conditions and upper limits involving databases, configurations, table sizes and counter limits to detect possible bottlenecks before they affect operations. The regulator also called for adequate logging of application- and component-level errors, supported by ready reference mechanisms to help technical teams interpret errors and speed up troubleshooting. Periodic testing and alerts for application and component-level controls would also be required across the PDC, near site and DRS to guard against configuration drift.

For stock exchanges, SEBI proposed an additional mechanism to recover lost trade data from clearing corporations if a disruption affects data replication at the near site or DRS. Stock exchanges and clearing corporations would need to establish appropriate standard operating procedures for such recovery. SEBI said the proposals draw on operational lessons from DR drills, testing and data recovery practices followed by MIIs and are intended to improve resilience while easing compliance requirements. The regulator has invited public comments on the proposals until October 5.

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