SEBI eases software testing requirement

Requirement of mandatory mock trading sessions to facilitate testing of new software or existing software that has undergone any change of functionality will be optional if a stock exchange provides suitable simulated test environment to test such software and ensures the test environment will be made available to all the members

New Delhi: Markets regulator Sebi on Tuesday relaxed the requirement of mandatory mock trading sessions to facilitate testing of new software or existing software that has undergone any change of functionality in certain conditions.

The decision comes after the regulator received various representations from stakeholders seeking relaxation in software testing norms. In a circular, Sebi said that requirement of mandatory mock trading sessions to facilitate testing of new software or existing software that has undergone any change of functionality will be optional if a stock exchange provides suitable simulated test environment to test such software and ensures the test environment will be made available to all the members.

Also, stock exchanges need to ensure that the test environment will be made available for at least two hours after market hours and at least on two trading days in a week. For the purpose of testing, stock exchange will make available data from at least one trading day in all segments and the same will not be older than one month from the day of the testing environment, Sebi said. "All trading members (excluding those who use only exchange provided front end and/or ASP services) having approved algorithms available with the member, irrespective of the algorithm having undergone change or not, shall participate in the simulated environment at least on one trading day during each calendar month at all the exchanges where they are members," Sebi said. This will be audited and reported in the system auditor report, it added.

Besides, exchanges will have to provide a daily log, including algos used, of members' participation in simulated environment to all participating members. Further, the exchanges will have to provide summary report of such activity to Sebi in the monthly development report. (PTI)