'Not ideal': How SEBI responded to MCX's recent technical glitch
What's the story
The Securities and Exchange Board of India (SEBI) has responded to the recent technical glitch at the Multi Commodity Exchange (MCX). Speaking at the Morningstar Investment Conference, SEBI Chairman Tuhin Kanta Pandey said that these incidents are not "ideal." He referred to a similar problem during June-July and stressed that such issues shouldn't be recurring. However, he added that further comments will depend on a complete analysis of the situation.
SOP explained
Pandey emphasizes on SOP adherence
Pandey clarified that Market Infrastructure Institutions (MIIs) have a Standard Operating Procedure (SOP) as per SEBI regulations. The SOP defines how incidents are managed and reported, including root cause analysis and relevant tagging. He said, "The entire process is followed as per this SOP," emphasizing its importance in handling such situations effectively.
RCA significance
Root Cause Analysis report submission timeline
On the Root Cause Analysis (RCA), Pandey said that the report is expected to be submitted within a fixed time as per SOP. He explained that the RCA process has multiple stages, including an initial report that must be provided within 24 hours. "We will adhere fully to the SOP, which clearly defines the steps to be followed," he added, underscoring SEBI's commitment to transparency in incident management.
Incident details
Trading on MCX resumes after over 4-hour halt
On October 28, a technical glitch at the commodity exchange MCX disrupted trading for over four hours. The issue delayed operations from the Disaster Recovery (DR) site. Trading finally resumed at 1:25pm on MCX. In its filing, MCX said, "Operations were shifted to the Disaster Recovery (DR) site, and trading started at 1:25pm. All trading systems are now functioning normally."
Regulatory action
Penalties for critical system disruptions not declared disasters
Moneycontrol reported that SEBI has contacted the commodity derivatives exchange for details on the disruption. The SOP for MIIs like stock exchanges, clearing corporations, and depositories requires strict time-bound disaster declaration and restoration protocols with aggressive financial disincentives. If a critical system is disrupted but not declared a disaster within 30 minutes, a penalty of 10% of average standalone net profit or ₹2 crore (whichever is higher) applies.