Document Type
Consultation Paper
Fourth in EODB Series
Issued On
June 22, 2026
Comment Deadline
July 13, 2026
Proposals Covered
77 Proposals
Circulars Affected
MSECC + MCCD + Depositories MC
Entities Covered
Stock Exchanges, CCs, Depositories
📢 CONSULTATION PAPER — COMMENTS INVITED UNTIL JULY 13, 2026
SEBI has issued a consultation paper proposing 77 changes to the trading software and technology framework for stock exchanges, and to the common IT-related provisions applicable to MIIs. The paper proposes one consolidated circular for exchanges and one consolidated circular for MIIs. This is part of SEBI’s EODB series and the proposals are not final until comments are reviewed and a final circular is issued.
The Securities and Exchange Board of India (SEBI) issued the Consultation Paper on Draft Circular for Trading Software and Technology at Stock Exchanges and Draft Consolidated Circular on Common Information Technology (IT) Related Provisions for Market Infrastructure Institutions (MIIs) on June 22, 2026. This is the fourth consultation paper in SEBI’s Ease of Doing Business (EODB) series and seeks to simplify overlapping technology and IT provisions across market infrastructure institutions.
The earlier three consultation papers in this series covered Administration of Exchanges, Trading at Exchanges, and Exchange Traded Derivatives including Commodity Derivatives. The present paper addresses Chapter 2 (Trading Software and Technology) of MSECC dated December 30, 2024 and Chapter 16 (Trading Software and Technology) of MCCD dated August 4, 2023.It proposes to replace the applicable provisions up to February 28, 2026 for Stock Exchanges (including Commodity Derivatives exchanges) and MIIs.
✅ Why This Paper Matters
- Reduces duplication across SEBI circulars and master circulars.
- Creates one consolidated framework for exchanges and one for MIIs.
- Touches trading software, audits, cyber security, BCP-DR, co-location, and capacity planning.
- Important for exchanges, clearing corporations, depositories, brokers, and system auditors.
📋 REGULATORY FOUNDATION
ISSUING AUTHORITY
Securities and Exchange Board of India (SEBI)
DATE ISSUED
June 22, 2026
CIRCULARS MODIFIED
Chapter 2, MSECC (Dec 30, 2024); Chapter 16, MCCD (Aug 4, 2023); Master Circular for Depositories (Dec 3, 2024)
CONTACT PERSONS
Lamber Singh, GM ([email protected]); Pratik Kumar, AGM ([email protected]); Vamsi Kiran SVS, AM ([email protected])
COMMENT DEADLINE
July 13, 2026 — online web-based form on SEBI website
DRAFT ANNEXURES
Annexure A1 (Trading Software & Technology for Exchanges); Annexure A2 (Consolidated IT Circular for MIIs); Annexure B (Track-change version)
📝 Public Comment Window
Comments can be submitted online on the SEBI website until July 13, 2026.
Two Proposed Output Circulars
OUTPUT 1 — ANNEXURE A1
Single Consolidated Circular on Trading Software and Technology for Stock Exchanges
Merges Chapter 2 of MSECC (for securities segment) and Chapter 16 of MCCD (for commodity derivatives) into a single circular applicable to all Stock Exchanges. Covers Internet Based Trading (IBT), Wireless Technology Trading, Direct Market Access (DMA), Smart Order Routing (SOR), Algorithmic Trading, Co-location, Capacity Planning, and Data Feeds.
OUTPUT 2 — ANNEXURE A2
Consolidated Circular for All MIIs on Common IT Related Provisions
A single unified circular applicable to all MIIs (Stock Exchanges, Clearing Corporations, and Depositories) covering Annual System Audit, Business Continuity Plan and Disaster Recovery (BCPDR), Cyber Security and Cyber Resilience, Capacity Planning, and Technology Advisories. Consolidates overlapping provisions from MSECC (paras 8, 9, 10, 12, 14) and Master Circular for Depositories.
🔎 Draft vs Final
This article summarizes the consultation paper only. The proposals may change after SEBI reviews public feedback and issues the final circulars.
Summary of Key Proposals (77 Proposals — Thematically Grouped)
🌐 A. Internet Based Trading (IBT) & Wireless Technology (Proposals 1–10)
1Merge IBT permission provisions (Paras 1.1.1 and 1.1.2.7.3(d)) — Simplification
2Net worth reference for IBT brokers to point to SEBI (Stock Brokers) Regulations, 2026 — remove duplicate computation details
3Merge system capacity and alternate arrangement provisions (Paras 1.1.2.2.2 and 1.4.1.5) — Simplification
4Delete broker-client KYC, risk management, contract note and cross-trade provisions (Paras 1.1.2.3–1.1.2.6) from MSECC — already in Master Circular for Stock Brokers; broker-client agreement replaced by Rights and Obligations document
5Update Network Security protocols (Para 1.1.2.7.1) — principle-based approach replacing hard-coded protocol names; add mandatory two-factor authentication; expand firewall provisions to include port whitelisting, network segmentation between public-facing systems and core trading infrastructure, and audit of firewall/WAF/IDS/IPS; remove SMART card references
6Delete WAP (Wireless Application Protocol) provisions (Para 1.2) — WAP is an obsolete technical standard; all registrations now under STWT section
7Remove mandatory IBT pre-registration requirement for STWT (Para 1.3.1) — brokers may offer only STWT without IBT registration, subject to fulfilment of all IBT eligibility requirements
8Elaborate session login non-storage provision (Para 1.3.3.8) — expand to cover user IDs, passwords, keys, hashes, hard coded references in line with CSCRF
9Remove STWT provisions overlapping with IBT — merge Para 1.3.3.2 into network security (add biometric/reliable access control); merge Para 1.3.3.4 into system capacity Para 1.1.2.2.2; delete order confirmation Para 1.3.3.7 (in stock broker MC); merge Para 1.3.3.9 with Para 1.1.2.7; delete Para 1.3.3.12 (widely adopted, no longer needs separate mandate)
10Make back-up and restore systems mandatory (Para 1.4.1.8) — currently only advisable; now mandatory for business continuity and data protection
📊 B. Direct Market Access (DMA) (Proposals 11–19)
11Remove DMA advantage explanations (Para 2.1) — generic in nature; no regulatory content
12Link audit trail retention period for DMA orders (Para 2.2.2.2) to SEBI (Stock Brokers) Regulations, 2026 (Reg. 15 and 16) — removes duplication
13Remove additional DMA system audit certificate (Para 2.2.2.7) — system audit report already received by exchanges; additional certificate unnecessary
14Extend DMA facility to ALL client categories (Para 2.2.3.1) — remove "Currently this facility is available for institutional clients"; extension subject to applicable RMS checks per client category
15Extend DMA for ETCDs to all investor categories as specified by exchanges from time to time (previously only SEBI-registered FPIs) — harmonises commodity segment DMA provisions with other segments
16Merge Part A and Part B of Annexure I (DMA terms and conditions) — common provisions retained; related provisions merged
17Delete cross-trade provisions (Para 2.2.7) from MSECC — already in Master Circular for Stock Brokers; obligations of exchange remain intact
18Investment Managers (IMs) need not be SEBI-registered for DMA facility (Paras 2.2.4.1–2.2.4.2) — key EODB measure for FPIs; guardrail added: client fully responsible for IM's actions; Annexure I updated to add: "The client shall ensure... the investment manager complies with the terms and conditions..."; audit trail requirement added to establish identity of ultimate client and IM at all times
19Delete electronic contract note provisions (Paras 3.1–3.4) from MSECC — pertain to brokers; already in Master Circular for Stock Brokers; MIRSD circular on client-broker dealings addresses this; Para 3.4 format to be incorporated in Master Circular for Stock Brokers
🤖 C. Mock Trading, Simulated Environment & Algorithmic Trading (Proposals 20–42)
20Mock trading sessions (Para 5.1.2.2.3) — shift from all user IDs approved for algo trading to all approved algorithms and related application servers participating, regardless of whether algorithm changed — resolves operational infeasibility of requiring all user IDs
21Test environment availability (Para 5.1.2.2.5.2) — remove phrase "after market hours" to accommodate commodity derivatives segment trading till 11:30/11:55 PM
22Summary report on mock session participation (Para 5.1.2.2.5.5) — submit to SCOT instead of SEBI directly; MDR has been discontinued
23Remove system auditor engagement for mock test certification (Para 5.1.3) from MSECC — obligation on stock brokers; already in Master Circular for Stock Brokers (Para 60.2.2)
24Add Enhanced Trading Interface (ETI) to pre-approval/periodic system audit scope (Para 5.1.6) alongside CTCL, IML, IBT, DMA, STWT, SOR, AT — ETI is newer framework with higher capabilities than IML
25Delete Standing Committee provisions and immediate reporting of slowdown/breakdown (Para 5.2 of MSECC and Para 16.1.13 of MCCD) — overlapping with BCP-DR para 9 and Annexure XI SOP for technical glitches; SCOT terms of reference already cover oversight of hanging/slowdown/breakdown
26Simplify trading terminal expansion provisions (Para 5.3) — replace general requirements applicable to every trade with: "adherence to all applicable regulatory requirements pertaining to a trade"
27Remove generic service provision line from Para 5.4.4 — "The service to the clients shall be provided by the broker's overseas office and its local office" — generic; every broker responsible to all clients regardless of order origin
28Merge overseas terminal capital adequacy, margin and surveillance provisions (Paras 5.4.6 and 5.4.8) — all trades through overseas terminals subject to same laws/regulations
29Shift settlement procedure for overseas terminal trades (Para 5.4.7) to Circular on Clearing Corporations — demerger
30Remove grievance redressal provisions for overseas terminal trades (Para 5.4.9) — covered under Chapter VI of MSECC (Arbitration and Investor Grievance) and SEBI ODR Circular dated July 31, 2023
31SOR application — single common portal approval (Para 6.1.3.1) — replace multi-exchange applications with single portal; approval by only one exchange on round-robin basis; portal and SOP to be developed by exchanges in consultation with Industry Standard Forum within 3 months
32SOR system auditor certifications clarified (Para 6.1.3.2) — CISA (ISACA), DISA (ICAI), CISM (ISACA), CISSP (ISC)² — cross-reference to algo trading auditor certification list
33Replace "broker-client agreement" with "Rights and Obligations" document in SOR client communication (Para 6.1.3.7) — per SEBI Circular CIR/MIRSD/16/2011 dated August 22, 2011
34Delete investor grievance cell provisions from SOR section (Para 6.1.3.17) — generic; covered under Chapter VI MSECC and SEBI ODR Circular July 31, 2023
35Merge Algorithm Trading provisions in MSECC (Para 7) and MCCD (Para 16.1) — best practices taken as common provisions; commodity-derivatives-specific provisions retained separately
36Delete specific order level risk controls (Paras 7.1.2.4.1 and 7.1.2.4.2) — already in Para 7.1.7; responsibility of stock exchanges for multi-layer risk controls remains under Para 7.1.2.4
37Clarify terminal re-enablement (Para 7.1.2.6) — add phrase "by stock exchanges in coordination with CCs in accordance with risk management procedures"
38Algo trading report to SCOT + exchange website (Para 7.1.2.9 and Para 16.1.18 of MCCD) — no longer to be submitted to SEBI; exchanges to submit to SCOT and disclose on website; MDR discontinued
39Harmonise OPS relaxation capacity threshold (Para 16.1.8 of MCCD) with new circular dated February 11, 2026 — installed capacity benchmark: 2x projected peak load (not 4x)
40Remove "taking into account liquidity" condition for algo trading in mini/micro contracts (Para 16.1.4 of MCCD) — algo trading improves market depth; multiple checks (OPS, OTR, price limits) already in place; condition removed subject to protection of small participants
41Net open position check (Para 16.1.10(V) of MCCD) — move out of order level risk controls and prescribe separately; exchanges found implementation as order-level control infeasible
42Uniform half-yearly system audit of algorithmic trading (Para 7.1.4 of MSECC) — make applicable to all segments including commodity derivatives
🔍 D. System Audit Framework (Proposals 43–50)
43Rationalise system audit report submission (Para 8.1.3) — single 3-month timeline from end of audit period (not split two-months completion + one-month submission); submit with SCOT comments; Governing Board comments submitted within 7 days after next Board meeting post audit
44Follow-on audit (Annexure V, Point 1(k)) — complete by next quarter after audit report submission; next system audit to cover points not covered in follow-on audit
45Auditor rotation — maximum 3 successive years (Annexure V, Point 1(c)) — previously ~1.5 years; adequate cooling-off period required on rotation; prevents conflict of interest
46MIIs to prepare detailed SOP for audit compliance checking (Annexure V, Point 1(f)) — covering all SEBI directions/advisories; SOP to adhere to guidelines in the new circular
47Merge auditor guidance points (Annexure V, Points 1(h) and 3) on compliance with SEBI circulars/directions — simplification
48Corrective action for NC/observations "at the earliest" (Annexure V, Point 1(i)) — phrase added given criticality of corrective actions
49Remove broker system audit provisions from MSECC and MCCD (Para 8.2 and Annexure IX of MSECC; Para 16.5 and Annexure ZC of MCCD) — already in Master Circular for Stock Brokers; for commodity derivatives Type I brokers: exempt from system audit, their provisions included in TOR of stock exchange system audit for commodity derivatives segment
50Remove PCM system audit provisions from MSECC (Para 8.3 and Annexures IXA–IXD) — to be prescribed in Master Circular for Stock Brokers
🔄 E. Business Continuity Plan & Disaster Recovery (BCP-DR) (Proposals 51–58)
51One-to-one correspondence PDC-DRS/NS (Para 9.1.2.1) — exceptions only on TAC recommendation and SEBI approval; advisory merged into provision
52Consolidate DR drills and live trading sessions (Paras 9.1.3.1 and 9.1.3.7) — DR drill not required in quarter when half-yearly live trading sessions from DRS (at least 2 consecutive days) are conducted; alternate quarters model
53Clarify 'Critical Systems' definition (Para 9.1.2.3) — add phrase "for an Exchange/Clearing Corporation shall include..."; MIIs may include additional systems as per defined policy
54Segregate update timelines PDC-to-DRS/NS (Para 9.1.2.6) — critical systems/application releases: reflected at DRS/NS before next trading day; OS/security patches: per CSCRF timeline; exceptions: consult SCOT for relaxation
55Expand timing diagrams for DR drills (Para 9.1.3.4) — include all DR activities with planned timelines, not just timing of failover
56DR drill results to SCOT within one month (Para 9.1.3.5) — replace Governing Board comments requirement within one month; Governing Board additional comments submitted within 7 days after next Board meeting post drill
57BCP-DR policy review: annual instead of half-yearly (Para 9.1.4.2) — review at least once a year (not once every six months); submission of policy document to SEBI not required (subject to annual SEBI inspection)
58Settlement reports to SCOT instead of SEBI (Para 9.4.4.3) — CCs and depositories to submit day-wise pay-in/pay-out completion, settlement delays, corrective action reports to their respective SCOTs
🔐 F. Cyber Security, Cyber Resilience & Data (Proposals 59–69)
59Update Indian Government website guidelines link (Para 10.3.7) — make generic reference: "MII shall refer to updates to the said guidelines from time to time" at https://guidelines.india.gov.in/introduction/
60Remove Cyber Swachhta Kendra provision (Para 10.4.1.2) — already covered in CSCRF (RS.MA.S5)
61Remove SCOT quarterly cyber security review provision (Para 10.4.1.3) — covered in CSCRF (GV.PO.S1, GV.PO.S2, GV.PO Guideline 9, Table 15 #5 — quarterly IT Committee meeting)
62Remove cyber threat vector and action plan Board placement provision (Para 10.4.1.4) — covered in CSCRF (GV.PO Guideline 9 and 10; RS.CO Guideline 4; RS.MA Guideline 2; RC.RP.S1)
63Remove VAPT and mock drill provisions (Para 10.4.1.5) — covered in CSCRF (RC.RP.S2, RC.RP.S3, Table 15 #14)
64C-SOC circular extended to Commodity Derivatives and their CCs (Para 10.6) — SEBI Circular CIR/MRD/CSC/148/2018 dated December 7, 2018 explicitly extended per CSCRF
65Harmonise CCMP review frequency (Para 10.6.6.5) — align with CSCRF (half-yearly for MIIs per Guideline RS.IM.S1) instead of annual per current MSECC
66Update IPEF Regulation reference (Para 10.9.15) — from Reg. 4(1)(j) to Reg. 4(1)(m) of SEBI IPEF Regulations, 2009 (current provision is "such other amount as the Board may specify")
67Remove data encryption advisory (Para 10.13) — already in CSCRF (PR.DS.S1/S2/S3 — data encrypted in motion, at rest, and in-use)
68Remove cyber security and resilience advisory provisions (Para 10.14 except 10.14.5 and 10.14.6) — replace with single generic provision: "With regard to the cyber security preparedness, MIIs shall strictly follow provisions related to SOC Operations, Network Security Management, VAPT, Change Management, Backup Management, Zero Trust, Physical Security etc. as prescribed in CSCRF"
69Delete CSCRF cross-reference paragraphs (Paras 10.1, 10.5, 10.7, 10.10, 10.12) — all are merely references to CSCRF; no need for reiteration as CSCRF is directly applicable to MIIs
🖥️ G. Co-location, Capacity Planning & Data Feeds (Proposals 70–77)
70Co-location vendors may offer hardware-only rack services (Para 11.2.5) — remove requirement that vendors must provide complete solution (hardware + trading software); vendors may now provide only hardware rack services; clients may install algo software on own or through exchange-registered vendor; vendors responsible for upkeep of infrastructure in their racks
71Shift OTR penalty provisions and algo unique identifier/tagging (Paras 11.2.14–11.2.17) to Algorithmic Trading Para 7 — OTR to Para 7; unique identifier/tagging merged into Para 7.1.7
72Merge software/algorithm testing requirements (Para 11.2.18) with Para 5.1.2.2.5 on mock trading and simulated test environment
73Quarterly co-location compliance report (Para 11.3) — submit to SCOT instead of Board; remove explanations wherever not required; SCOT is expert body; reduces Board burden
74Merge commodity derivatives co-location/co-hosting provisions (Para 16.2 of MCCD) into MSECC while maintaining segment-wise requirements
75Merge and harmonise Capacity Planning provisions (Para 12 of MSECC; Para 4.62 of Depositories MC; SEBI Circulars of December 10, 2024 and February 11, 2026) — threshold for action: actual capacity utilisation exceeds 75% of installed capacity → immediate action (fine-tuning or capacity enhancement); SCOT to oversee; framework for augmentation in Capacity Planning and Real-Time Performance Monitoring Policy of MII; Depositories: 75% threshold over 15-day rolling basis; uniform provisions for all Stock Exchanges and CCs across segments
76Retain system clock synchronisation at one place only (Para 13.1.4) — remove duplicates from Paras 6.1.3.18 and 7.1.2.10
77Consolidated IT circular for all MIIs — proposals 43–77 (except 70, 71, 72, 73, 74, 76) form the new consolidated circular for Exchanges, Clearing Corporations, and Depositories on Annual System Audit, BCP-DR, Cyber Security & Cyber Resilience, Capacity Planning, and Technology Advisories
Before vs. After: Key Structural Changes
9 Specific Questions for Public Comments
1Whether provisions covered under Chapter 2 of MSECC (December 30, 2024) and Chapter 16 of MCCD (August 4, 2023) should be merged?
2Whether provisions related to Stock Exchanges and those related to Clearing Corporations in Chapter 2 of MSECC and Chapter 16 of MCCD should be separated (except common IT provisions proposed for consolidated MII circular)?
3Wherever the above two are proposed — whether any risks or issues are envisaged? What safeguards should be implemented?
4Wherever provisions (such as WAP trading) are proposed to be removed — whether any risks to securities market or investors? What safeguards should be prescribed?
5Circulars/communications issued to Stock Exchanges by SEBI till February 28, 2026 have been incorporated in the revised Chapter on Trading Software and Technology — whether any other circular/communication needs to be incorporated?
6Whether provisions from MCCD are adequately covered in merged provisions in the new Circular for Stock Exchanges?
7Whether there is any discrepancy with respect to merged provisions being made applicable to a segment/MII they were not intended for?
8Specific comments/suggestions on the detailed provisions in this consultation paper.
9Any other comments and suggestions.
How to Submit Comments
Deadline: July 13, 2026
Mode: Online web-based form only at: sebi.gov.in/sebiweb/publiccommentv2
Subject (for email technical issues): "Modifications to Master Circular for Stock Exchanges, Master Circular for Commodity Derivatives Segment on Trading Software and Technology for Stock Exchanges and Master Circular for Depositories on Information Technology related provisions"
Email contacts for technical issues:
• Lamber Singh, GM — [email protected]
• Pratik Kumar, AGM — [email protected]
• Sharaffkhana V S Vamsi Kiran, AM — [email protected]
Note: Email ID and phone number cannot be used more than once per consultation paper. All fields in the form are mandatory. Comments must be submitted after responding to all proposals in the dropdown.
Mode: Online web-based form only at: sebi.gov.in/sebiweb/publiccommentv2
Subject (for email technical issues): "Modifications to Master Circular for Stock Exchanges, Master Circular for Commodity Derivatives Segment on Trading Software and Technology for Stock Exchanges and Master Circular for Depositories on Information Technology related provisions"
Email contacts for technical issues:
• Lamber Singh, GM — [email protected]
• Pratik Kumar, AGM — [email protected]
• Sharaffkhana V S Vamsi Kiran, AM — [email protected]
Note: Email ID and phone number cannot be used more than once per consultation paper. All fields in the form are mandatory. Comments must be submitted after responding to all proposals in the dropdown.
Who Is Affected and What This Means
📌 Key Takeaway
SEBI’s consultation paper aims to simplify trading technology and IT compliance across MIIs by consolidating overlapping circulars and modernizing rules for trading, audits, cyber security, BCP-DR, and capacity planning.
📎 SOURCE & REFERENCES
Primary Source: SEBI Consultation Paper on Draft Circular for Trading Software and Technology at Stock Exchanges and Draft Consolidated Circular on Common IT Related Provisions for MIIs | Issued June 22, 2026
Official Link: sebi.gov.in (PDF)
Circulars Modified: Chapter 2, MSECC (Dec 30, 2024); Chapter 16, MCCD (Aug 4, 2023); Master Circular for Depositories (Dec 3, 2024)
Related Circulars: SEBI CSCRF; SEBI Circular on ODR (July 31, 2023); SEBI Capacity Planning Circular (Dec 10, 2024); SEBI Commodity Derivatives Capacity Planning Circular (Feb 11, 2026); SEBI C-SOC Circular CIR/MRD/CSC/148/2018 (Dec 7, 2018); SEBI (Stock Brokers) Regulations, 2026
Comment Deadline: July 13, 2026 | Online form: sebi.gov.in/sebiweb/publiccommentv2
Contact: Lamber Singh, GM ([email protected]); Pratik Kumar, AGM ([email protected]); Vamsi Kiran SVS, AM ([email protected])
Official Link: sebi.gov.in (PDF)
Circulars Modified: Chapter 2, MSECC (Dec 30, 2024); Chapter 16, MCCD (Aug 4, 2023); Master Circular for Depositories (Dec 3, 2024)
Related Circulars: SEBI CSCRF; SEBI Circular on ODR (July 31, 2023); SEBI Capacity Planning Circular (Dec 10, 2024); SEBI Commodity Derivatives Capacity Planning Circular (Feb 11, 2026); SEBI C-SOC Circular CIR/MRD/CSC/148/2018 (Dec 7, 2018); SEBI (Stock Brokers) Regulations, 2026
Comment Deadline: July 13, 2026 | Online form: sebi.gov.in/sebiweb/publiccommentv2
Contact: Lamber Singh, GM ([email protected]); Pratik Kumar, AGM ([email protected]); Vamsi Kiran SVS, AM ([email protected])
Disclaimer: This article is prepared for informational purposes only and does not constitute legal advice. Readers should refer to the original SEBI consultation paper and draft circulars (Annexures A1, A2, and B) before acting. CorpLawUpdates.in is not responsible for any action taken in reliance on this content.
