In a bid to provide continuity of trading for investors, market regulator SEBI has asked the National Stock Exchange and Bombay Stock Exchange to act as a backup to each other, in the event of an outage. This would come into effect from April 1, 2025.  

In case of an outage of a stock exchange during trading hours, the participants with open positions would be exposed to price risk on such open positions, as there could be material news flow during that time.

 “It has been decided that to begin with, NSE would act as an alternative trading venue for BSE and vice-versa. Both exchanges would prepare a joint SOP that would include a plan to be invoked at the time of outage on one exchange along with the flow of activity involving the affected exchange and its alternative trading venue and the roles/responsibilities of each of them. The aforesaid SOP should be submitted to SEBI within 60 days from the date of the circular,” the market regulator said.   

“If identical or correlated trading products are available on another trading venue, then participants can hedge their open positions by taking offsetting positions in identical or correlated indices on other exchanges. Further, as these segments are interoperable, taking offsetting positions in other trading venue would net off such open positions for end clients and release the margin,” SEBI said.

To ensure continuity, exchanges may create reserve contracts for scrips (i.e. exclusively listed scrips on other exchange) and single stock derivatives not traded on their exchange (and available on other exchange), to be invoked at the time of outage on the other exchange.

There have been several instances of an outage over the past 10 years.

On February 24, 2021, the NSE halted trading for four hours due to a technical glitch. On September 24, 2019 NSE system faced connectivity issues with internet service providers, which resulted in a trade outage in the last 15 minutes of the session, impacting several participants with active positions in the market. On July 11, 2017, trading halted on NSE for three hours as quotation stopped updating. On July 3, 2014, the BSE halted trading for three hours due to network outage.