The Securities and Exchange Board of India (Sebi) in partnership with the nation’s two popular stock exchange – the National Stock Exchange and the Bombay Stock Exchange – are designing a system to counter the threat of cyber assaults on stock exchanges, its chairperson Madhabi Puri Buch said at an event organized by Indian Institute of Management (IIM) Bangalore earlier this week.
Under the new mitigation system which will be rolled out in March next year, the data of every customer’s trading and collateral on exchange A will be stored in a server located next to exchange B’s, in their data center.
“If exchange A goes down, and if it is determined that it is on account of a software attack, or cyber security attack, and it is not possible for their disaster recovery site to come in time, Sebi will press the button for that data to be uploaded on exchange B,” Buch explained. This mechanism will assist all the participants in the market to operate on exchange B as they were operating on exchange A.
The market regulator has also designed algorithms in-house that can flag cases of misconduct, front-running, and insider trading.
“We worry a lot about cyber security. When this system kicks in, we would have prevented something (like a cyber-attack),” Buch added.
According to the SEBI chief, a line is needed to be drawn on financial influencers and their impact. We cannot act against wrongdoings if there is not a contract signing between an influencer and a person who follows their financial advice.
Last month, the regulator brought out public service messages, warning customers from taking financial advice from individuals who are not registered with Sebi as investment advisors.
Additionally, stock exchanges at the behest of the regulator have also ramped up efforts to warn investors against following stock tips via unauthorized texts and sharing dematerialized account details with such entities.
“Reality is that the regulators will always be one step behind but hopefully not too many steps behind. The modus operandi of wrongdoers in the financial market may continue to evolve as the underlying technology evolves. The idea is to make it harder and harder for people to do bad things, “Buch concluded.
