SEBI Proposes Shorter Four-Hour Disaster Recovery Drills and Tighter Resilience Norms for Market Infrastructure Institutions — September 15, 2026

The Securities and Exchange Board of India (SEBI) has released a consultation paper proposing to overhaul the Business Continuity Plan (BCP) and Disaster Recovery (DR) framework for Market Infrastructure Institutions (MIIs), which encompass stock exchanges, clearing corporations, and depositories. Under the draft norms, the mandatory duration of disaster recovery drills would be reduced from an entire trading day to a targeted session of at least four hours.

At present, MIIs are required to conduct mock DR drills spanning an entire trading session to demonstrate an intraday switchover from their Primary Data Centre (PDC) to their Disaster Recovery Site (DRS). This requirement has created significant operational bottlenecks for market participants, particularly in commodity derivative segments where trading sessions often stretch until 11:55 PM.

Key Proposals in the Consultation Framework

Under the proposed guidelines, DR drills will be conducted on non-working days, beginning at the primary data centre and systematically switching over to the disaster recovery site. The total drill duration, including switchover time, must be at least four hours.

To ensure that the reduced drill duration does not compromise system integrity, SEBI has outlined several compensatory safeguards:

• Real-Life Load Simulation: Exchanges and depositories must simulate real-life volumes, order rates, and participant activity close to peak operating levels rather than running hollow test scripts.
• Disruption Scenarios: Drills must evaluate various crisis conditions, including network failures and sudden hardware crashes, based on a comprehensive scenario list vetted by each institution’s Standing Committee on Technology (SCOT).
• Beyond-Transaction Stress Testing: Primary data centres must undergo stress testing that covers not only transactional orders per second but also backend databases, large table sizes, and master records.
• Data Recovery Mechanisms: Stock exchanges must institute protocols to recover any lost trade data from clearing corporations in the event of an abrupt intraday outage.

Impact on Indian Capital Markets

The proposed norms reflect SEBI's broader effort to modernize market technology architecture following recent upgrades like the Information Technology Resilience Index (ITRI). Over the past decade, Indian equity and derivative trading volumes have surged exponentially, making stock exchanges critical systemic utilities where minutes of downtime can disrupt billions of rupees in trade flow.

By moving drill sessions to non-working days and condensing them to four hours, broking houses, technical vendors, and institutional trading desks will face reduced operational fatigue over weekends. At the same time, the regulatory focus shifts from the mere duration of a drill to the depth of testing, ensuring that clearing corporations and exchanges can seamlessly failover to backup sites with near-zero data loss during live emergencies.

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