Mumbai: Sebi Market Regulator on Monday said that intermediaries and other financial market intermediaries can pay up to 10% of the average net profit of the previous two years in a penalty if there is a delay or failure to report disruptive technical disorders.
He also said that in addition, MD and CTO exchanges can be punished to pay up to 10% of their annual salary if there is a delay or failure.
In February this year, Sebi said that it was in the process of forming a comprehensive policy with financial disincentives built for these failures by exchange and other financial market intermediaries, comprehensively called the market infrastructure institution (MII).
Market regulators also come out with detailed standard operating procedures (SOP) for all MII.
These institutions include exchanges, cleaning companies, and deposits.
Sebi has placed a timeline for corrective actions related to various types of technical disorders.
If it also says that a technical error that leads to trade disorders must be reported to Sebi, the analysis of the causes of fast root (RCA) carried out and a report submitted to the regulator in 21 days after the incident.
In the event of a failure to comply with this deadline, MII must pay a monetary penalty of Rs 1 lakh for every day of missing reporting, which can increase to Rs 25 Lakh.
Sebi also said that in the case of “interference with one or more of the ‘critical system’, MII will, in 30 minutes after the incident, declared the incident as a ‘disaster'”.
If MII fails to report such disasters, institutions will pay “10% of the average independent net income for two previous financial years or RS 2 Crore, which is higher”.
It was also said that MD and CTO MII had to pay a penalty equivalent to “10% of each of their annual salary (both permanent components and variables) for the financial year when the disaster occurred”.
To avoid technical disruptions, SEBI also said that MII must also include business continuity plans, disaster recovery policies and system audit processes.
Exchanges to finite for reporting late disturbances
