The Securities and Exchange Board of India has issued guidelines for cyber security and cyber resilience in market infrastructure institutions (MII) such as stock exchanges, clearing corporations and depositories. According to SEBI, there has been a surge in cyber risk in capital markets owing to the interdependency of various entities under market infrastructure institutions. The guidelines are applicable beginning August 29, and MIIs have been asked to put in place systems for implementation of the guidelines within 120 days of issuance.

"MIIs are required to take necessary steps to put in place systems for implementation of the circular, including necessary amendments to the relevant bye-laws, rules and regulations, if any, within 120 days from the date of the circular," says SEBI.

The guidelines include 23 norms including maintenance of encrypted backup data and gold images of critical systems that MIIs need to follow in order to boost cyber security.

“MIIs shall maintain offline, encrypted backups of data and shall regularly test these backups at least on a quarterly basis to ensure confidentiality, integrity and availability. MIIs shall maintain offline, encrypted backups of data and shall regularly test these backups at least on a quarterly basis to ensure confidentiality, integrity and availability,” says the capital markets regulator.

Meanwhile, the capital markets regulator has also proposed the regulatory framework for the social stock exchange in order to facilitate fundraising by NPOs (not-for-profit organizations). NSE and BSE have both set up the SSE segment. An NPO is required to be registered with SSE to raise funds.

The capital markets regulator has recommended that the minimum issue size be reduced to ₹50 lakhs. At present the minimum issue size is ₹1 crore. “SSE is at an initial stage and NPOs may find it difficult to raise Rs. One crore from a limited set of investors. The investors are also not aware of the SSE framework which will develop through more and more awareness programs. It may therefore not be easy for such NPOs to find investors to raise Rs. One crore. Further, it is also noted that minimum fund flow requirements for the past financial year of the NPO on the SSE have been fixed at Rs. 50 lakhs (for annual spending) and Rs. 10 lakhs (for funding),” says SEBI.

The capital markets regulator has also proposed that the minimum application size be reduced to ₹10,000. At present, the minimum application size is ₹2 lakhs. “Lowering the minimum application size threshold will help the large number of investors who may like to subscribe to ZCZP of more NPOs. Further, the minimum application size of Rupees 2 lakh may be too large for people who donate on a regular basis,” says the capital markets regulator.

Market Infrastructure Institution

SEBI issues new guidelines to boost cybersecurity in exchanges