SEBI Proposes Shorter DR Drills and Stronger Operational Resilience Norms for Market Infrastructure Institutions
SEBI Consultation Paper | Comments due by October 5, 2026
Stock exchanges, clearing corporations and depositories currently run their mandatory disaster recovery (DR) drills for an entire trading day — a requirement SEBI now proposes to cut down to a minimum four-hour exercise on a non-working day. The Securities and Exchange Board of India has released a consultation paper proposing changes to the Business Continuity Plan (BCP) and Disaster Recovery (DR) framework applicable to Market Infrastructure Institutions (MIIs), covering three areas: the duration and format of DR drills, operational resilience at the primary data centre, and data recovery arrangements for stock exchanges.
Quick Answer
SEBI's consultation paper proposes reducing the mandatory DR drill duration for MIIs — stock exchanges, clearing corporations, depositories and commodity derivatives segment entities — from a full trading day to a minimum 4-hour drill conducted on a non-working day. It also proposes new stress-testing, boundary-monitoring and error-logging requirements at the primary data centre (PDC), and a framework — with SOPs jointly developed by stock exchanges and clearing corporations — to recover trade data during disruptions. Public comments are invited until October 5, 2026.
At a Glance
Background: Why SEBI Is Revisiting the BCP-DR Framework
BCP-DR guidelines for MIIs are not new. SEBI first stipulated them in April 2012, and the framework was significantly enhanced in March 2019 and again in March 2021. The current requirements sit in the Master Circular dated December 30, 2024 for Stock Exchanges and Clearing Corporations, with identical provisions carried into the Master Circulars for Depositories and for the Commodity Derivatives Segment.
Under Para 9.1.3.3 and Para 9.1.3.8 of that Master Circular, MIIs are currently required to run DR drills covering one full trading day — conducted as a mock trading session rather than during real trading — including a scenario of intraday shifting from the Primary Data Centre (PDC) to the Disaster Recovery Site (DRS), to demonstrate they can meet their stipulated Recovery Time Objective (RTO) and Recovery Point Objective (RPO). SEBI notes that a stock exchange running a commodity derivatives segment — where trading can run until 11:55 PM for certain products — represented that conducting a full-day DR drill has become cumbersome for both market participants and the MIIs themselves. That representation is the trigger for this consultation paper.
What Is Being Proposed?
1. Shorter, Non-Working-Day DR Drills
Instead of a full trading-day drill conducted during live market hours, SEBI proposes that MIIs run DR drills on a non-working day, initiating operations at the PDC and then switching over to the DRS. The overall session — including the switchover itself — should run for at least 4 hours. Within that window, MIIs would still need to cover all scenarios of market operations and simulate real-life load and participation close to actual levels, so the shorter format is not meant to dilute the rigour of the test.
A DR drill is a rehearsal where an exchange or clearing corporation deliberately shifts its operations from its main data centre to its backup site, to prove the backup can actually take over if something goes wrong. Today that rehearsal runs for a full trading day as a mock trading session — a simulated exercise, not real trades. SEBI's proposal moves the rehearsal to a non-working day when the market is closed and shrinks it to a focused 4-hour window.
As part of the switchover exercise, MIIs would be required to test various scenarios impacting their systems based on their specific architecture and line of business — and this list of scenarios would need to be reviewed by the Standing Committee on Technology (SCOT) of the MII before the drill. SEBI's stated rationale is that this improves preparedness for real disruptions during live operations, while easing the burden of full-day drills on market participants and MIIs alike.
2. Strengthening Operational Resilience at the Primary Data Centre
Beyond the drill format, SEBI proposes four additional measures aimed at the PDC itself:
- Broader stress testing: MIIs would need to stress-test and mock-test not just transaction volumes and orders per second, but also masters, table sizes and other non-transactional components, to assess how systems perform under scaled-up load and database record growth. MIIs would also need to regularly test fault tolerance — confirming that if a component, switch or server fails, a redundant unit automatically takes over without disrupting business continuity.
- Boundary and upper-limit monitoring: MIIs would need to proactively identify, document and monitor boundary conditions and upper limits — such as database size, configuration limits, table size and counter limits — to catch potential bottlenecks before they are breached as activity increases.
- Error logging and a ready reckoner: MIIs would need adequate logging of errors at the application and component level, along with a ready reckoner for interpreting those errors, to speed up troubleshooting when a component or piece of software fails.
- Configuration-drift checks: MIIs would need periodic tests and alerts verifying component and application-level controls and configurations across the PDC, Near Site (NS) and DRS, to ensure there is no drift and that configurations remain identical across sites.
"Configuration drift" happens when a backup system's settings quietly fall out of sync with the primary system over time — a patch applied on one side but not the other, for instance. If that happens unnoticed, the backup may not behave the way the primary system does when it's actually needed. SEBI wants MIIs to keep checking for this rather than assuming the backup stays identical by default.
3. Strengthening Data Recovery for Stock Exchanges
The third proposal addresses a specific gap: today, if a stock exchange's operations are disrupted, its business continuity protocol involves recovering trade data from its Near Site or DRS. SEBI points out that the disruption itself could impact replication at the Near Site or DRS, leaving no clean copy to recover from at either location. Since the connectivity arrangement between a stock exchange and a Clearing Corporation is separate from the exchange's link to its own Near Site or DRS, SEBI proposes that stock exchanges put in place a framework to recover lost trade data from the relevant Clearing Corporation in such a scenario, with the necessary SOPs to be established jointly by the stock exchange and the Clearing Corporation.
Who Is Affected?
Directly affected: Stock exchanges, clearing corporations and depositories — collectively defined by SEBI as Market Infrastructure Institutions (MIIs) — including MIIs operating a commodity derivatives segment.
Specifically affected: Stock exchanges bear the additional, separate obligation under proposal 4.3 to build a data-recovery framework with Clearing Corporations.
Indirectly affected: Trading members, clearing members and market participants who take part in mock DR drills, since the timing and format of these drills would change.
Why This Matters
For MIIs, the drill-format change is primarily an operational relief — a 4-hour non-working-day drill is materially easier to schedule and execute than a full trading-day exercise that also pulls in market participants. But the trade-off is that the drill must still be comprehensive: SEBI has not proposed reducing scenario coverage or load-simulation rigour, only the duration and timing. The PDC resilience proposals go further than drill mechanics — they ask MIIs to build ongoing monitoring and testing discipline (boundary limits, error logging, configuration-drift checks) that operates independently of any scheduled drill. And the data-recovery proposal for stock exchanges closes a real gap: a scenario where both an exchange's primary and backup sites are compromised together, with no fallback beyond the Clearing Corporation's own records.
When Does It Apply?
These are proposals, not notified requirements, so there is no effective date yet. The only firm date in the consultation paper is the deadline for public comments: October 5, 2026. SEBI would need to consider stakeholder feedback and separately notify final amendments to the relevant Master Circulars before any of these proposals take effect.
What Should Practitioners Watch?
CorpLawUpdates Analysis
The shift from a full-day live drill to a shorter, off-market drill is a sensible response to an operational complaint SEBI itself attributes to a specific stock exchange's commodity derivatives segment, where trading runs close to midnight. What is notable is that SEBI has paired this relief with a tightening of substance elsewhere — the PDC resilience proposals effectively convert BCP-DR compliance from a periodic-drill exercise into a continuous monitoring obligation. For compliance and technology teams at MIIs, the practical question raised by this paper is less about drill logistics and more about whether current monitoring infrastructure can support ongoing boundary-limit tracking and configuration-drift detection, since those are less exercise-based and are expected to run at all times. The data-recovery proposal for stock exchanges is comparatively narrow but addresses a genuine single point of failure: a joint NS/DRS replication failure at the exchange level, where the Clearing Corporation's own records become the last line of defence.
Frequently Asked Questions
What has SEBI proposed under this consultation paper?
SEBI has proposed shortening mandatory DR drills for Market Infrastructure Institutions from a full trading day to a minimum 4-hour drill on a non-working day, along with new operational resilience requirements at the primary data centre and a data-recovery SOP requirement for stock exchanges.
Who must comply with these proposals?
Stock exchanges, clearing corporations and depositories — including those operating a commodity derivatives segment — would be affected if the proposals are notified. Nothing is currently mandatory since this is a draft consultation paper.
What is the current DR drill requirement for MIIs?
Under Para 9.1.3.3 and Para 9.1.3.8 of the Master Circular dated December 30, 2024, MIIs currently conduct DR drills covering one full trading day — run as a mock trading session — including an intraday shift from the PDC to the DRS, to demonstrate they can meet their RTO/RPO.
What is the proposed new DR drill format?
A DR drill conducted on a non-working day, initiating operations at the PDC and switching over to the DRS, with an overall session time of at least 4 hours including the switchover, while still covering all market operation scenarios at real-life load levels.
What role would SCOT play under the proposal?
The Standing Committee on Technology (SCOT) of each MII would need to review the comprehensive list of switchover scenarios tested during the DR drill.
What new PDC resilience measures are proposed?
Broader stress and fault-tolerance testing beyond transaction volumes, proactive monitoring of boundary conditions and upper limits, adequate error logging with a ready reckoner, and periodic checks to prevent configuration drift between the PDC, Near Site and DRS.
What is the proposed data-recovery requirement for stock exchanges?
Stock exchanges would need to put in place a framework to recover lost trade data from the relevant Clearing Corporation, for scenarios where a disruption also impacts replication at the exchange's own Near Site or DRS. The necessary SOPs for this would be established jointly by the stock exchange and the Clearing Corporation.
By when must comments be submitted?
Public comments are due by October 5, 2026, through SEBI's online public comments form. Technical issues with the portal can be routed by email to the SEBI officials named in the consultation paper.
Has SEBI notified these changes yet?
No. This is a consultation paper seeking feedback. None of the proposals are currently binding, and no effective date has been announced.
Source Note
Document: Consultation Paper — Measures to strengthen Business Continuity Plan (BCP) and Disaster Recovery (DR) of Market Infrastructure Institutions (MIIs)
Issuing authority: Securities and Exchange Board of India (SEBI)
Comment deadline: October 5, 2026
Contact for technical issues: Shri Darshil Bhatt, Deputy General Manager ([email protected]); Shri Abhijeet Srivastava, Assistant General Manager ([email protected])
Primary source: [INTERNAL LINK: SEBI Public Comments Portal — Consultation Paper on BCP-DR for MIIs]
This article is for informational and educational purposes only and does not constitute legal or regulatory advice. Readers should verify the applicable primary regulatory source before taking action.
