SEBI announces stock exchange interoperability from April 1, 2025

The Securities and Exchange Board of India (SEBI) has announced that, effective April 1, 2025, stock exchanges will be interoperable to ensure business continuity during technical glitches or outages. This move covers cash, derivatives, currency derivatives, and interest rate derivatives.

Initially, the National Stock Exchange (NSE) will serve as an alternative trading platform for the Bombay Stock Exchange (BSE) and vice versa, according to SEBI's announcement.

Exchanges have been instructed to develop a standard operating procedure (SOP) within the next two months.

The interoperability allows traders to hedge open positions by taking offsetting positions in identical or correlated indices on different exchanges. This will net off open positions for clients and release the margin, eliminating the need for separate treatment of such products.

In cases where a stock is exclusively listed on one exchange, the other exchanges may create reserve contracts to be activated during an outage.

Furthermore, if an exchange lacks a highly correlated index derivatives product available on the other exchange, it may create such an index and introduce corresponding derivatives contracts. This ensures that traders can hedge positions in index derivatives during an outage.

For example, NSE offers derivatives contracts on Nifty Financial, Nifty Midcap Select, and Nifty Next 50, while BSE does not have correlated index derivatives for these.

According to the new mandate, in the event of an outage, exchanges must inform SEBI within 75 minutes and invoke the business continuity plan. The alternative trading venue must be activated within 15 minutes of this notification.