New Delhi: Institutions looking after the stock market and other market infrastructure facilities as well as their top officials will be entitled to fines for rectification and maintenance of technical glitches in the capital markets. SEBI has framed such rules keeping a sound compliance system.
The capital markets regulator has said this while issuing detailed Standard Operating Procedures (SOPs) for market infrastructure facilities running the online system in the stock exchanges. These norms have been brought in less than five months after the country’s largest market, the National Stock Exchange, was halted for nearly four hours due to a technical glitch.
In a circular issued by SEBI on Monday, it has been said that if there is any disturbance in trading in the market infrastructure facilities – stock market, clearing corporation and depository beyond the earlier announced time, then it will be a “financial form” for the entire system. will lead to punitive action.
Under this framework, market infrastructure support institutions (MIIs) will have to pay a fine ranging from Rs 1 lakh to Rs 2 crore for every working day for violating standard operating procedure. On the other hand, the Managing Director and Chief Technology Officer (CTO) of such MIIs will have to pay a penalty of up to 10 per cent of their annual salary.
The penalty will be in line with the various timelines mentioned in SEBI’s announcement regarding technical glitches in MIIs and rectification. Along with this, MII can also be fined for delay in submitting a detailed report about the root cause regarding MII technical fault.
SEBI says that with this initiative, MIIs will be constantly vigilant about their system and will focus on its capability and performance. Along with this, we will keep updating our network system to prevent the possibility of any kind of technical glitch so that in case of any disturbance, they will be able to start operations as soon as possible.
There have been occasions when business activities have been affected due to disruption in the network system. On February 24 this year, due to a similar technical glitch, the National Stock Exchange could not trade for nearly remaining hours.