Sebi has directed clearing corporations to fortify their risk management systems (RMS) using a software-as-a-service (SaaS) model to bolster resilience against significant software glitches. These systems play a critical role in maintaining the smooth functioning of the securities market by conducting real-time risk management for trades on stock exchanges.
The absence of an operational RMS poses a substantial threat to the continuous trading activities on stock exchanges. In a circular, Sebi emphasized the need for clearing corporations to establish their critical Risk Management Systems through the SaaS model, aiming to introduce an additional measure for business continuity specifically targeting issues with RMS.
During the initial phase, the focus will be on creating systems that provide an added layer of business continuity, particularly addressing concerns regarding RMS malfunctions within existing interoperable segments of clearing corporations. Sebi outlined the approach, indicating that each clearing corporation should develop a system using the RMS-related software components of another corporation, termed as SaaS-RMS.
Sebi specified that in the event of an inability to conduct real-time risk management online, the clearing corporation must swiftly decide to transition its operations to SaaS-RMS, allowing for a seamless continuation of activities. The regulator highlighted a timeline of 30 minutes for this decision-making process, ensuring swift action during disruptions.
Moreover, all connected activities, including the transmission of violation messages to exchanges and the provision of details for interacting with SaaS-RMS, will be activated within the same 30-minute window through SaaS-RMS. Sebi mandated the execution of mock sessions of SaaS-RMS at least once every quarter to familiarize and train clearing members with the system.
