NSE, BSE To Be 'Alternative Trading Venues' From This Date - SEBI Mandate

Following the recent technical glitch at the National Stock Exchange ( NSE ), which caused the longest-ever trading halt in Indian capital markets, SEBI has stressed on the need to create procedures for interoperability in the Indian stock exchanges.

In its latest update on Thursday, SEBI said that going forward, 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 roles/responsibility of each of them," SEBI said in a circular.

The market regulator also asked the exchanges to draw SOP to cover changes, if any, in the systems of stock brokers / CCs to implement the measures mentioned in the circular for end investors. In line with the SEBI order, both exchanges will now develop a joint Standard Operating Procedure (SOP) to outline the process during an outage, detailing the roles and responsibilities of each exchange. "The aforesaid SOP should be submitted to SEBI within 60 days from the date of the Circular," SEBI said. 

What is interoperability in the stock market?

In the stock market, interoperability refers to the ability to settle or clear trades executed on any exchange—such as NSE, BSE, or MSEI—through any of the available clearing corporations, not just the one associated with the exchange where the trade was made. For example, a trade executed on NSE could be settled through BSE’s clearing corporation and vice versa. This system allows seamless trading across multiple exchanges, enabling brokers to manage trades more efficiently and reducing the risk of disruptions.

The provisions of this circular would come into effect from April 1, 2025 - SEBI further said.