SEBI Circular On Commodity Derivatives Segment Outages Handling & Trading Hours Extension

SEBI has informed stock exchanges on 27th May,2024, vide circular regarding the standard operating procedure that stock exchanges should follow for commodity derivatives segments’ outages handling and extension of trading hours.

Earlier on 9th January, 2023, SEBI has informed stock exchanges regarding the standard operating procedure for cash market and equity derivatives segment’s outages handling and extension of trading hours.

In this sequence, based on the advice of the Commodity Derivatives Advisory Committee (CDAC) of SEBI, it has formulated a circular for commodities derivatives segment.

This standard operating procedure will be effective from 1st July,2024 onwards for commodities derivatives segment.

SOP by SEBI to Stock Exchanges

Stock Exchange Outages Handling

Stock exchange outages means any disruption in trading during trading hours by any means.

During the trading outages in one stock exchange, trading hours should not be affected in all other stock exchanges.

The stakeholders of the stock exchange which has suffered trading outage should report to SEBI as follow.

Sender	Receiver	Communication
Outages in stock exchange	SEBI	As soon as the occurrence of outage, through an email to techglitch@sebi.gov.in
Outages in stock exchange	Market Participants/ Trading Members	Within 15 minutes from the occurrence of outages through broadcast message and / or by publishing in website.
Ongoing outages in stock exchange	SEBI and market participants	At time intervals of 45 minutes from initial outage occurrence until restoration of trading.

NOTE

If there is any extension of trading hours, Stock exchange must inform SEBI and market participants.

Stock exchanges must ensure that the trading operations are restored to normalcy even from Disaster recovery site .

Trading Hours Extension

For Security Contracts Traded Up to 5.00 pm
Time at which Communication send to Market Participants	Restarted Trading Time	Trading Hours Extended	Note
At 4.15 pm	4.30 pm - 5.00 pm	No change in trading hours	If the trading resumed to normalcy before 4.15 pm (i.e. 30 minutes before the actual market closing time), then there will not be any change in trading hours.
At 4.45 pm	5.00 pm – 5.30 pm	Trading Hours extended by 30 minutes	If the trading resumed to normalcy before 4.45 pm. The stock exchanges will extend the trading hours by 30 minutes.
After 4.45 pm	NA	No extension in trading hours post	If the trading resumes only after 4.45 pm , then the stock exchange will not extend trading hours.
For Security Contracts Traded Up to 9.00 pm
Time at which Communication send to Market Participants	Restarted Trading Time	Trading Hours Extended	Note
At 8.15 pm	8.30 pm - 9.00 pm	No change in trading hours	If the trading resumed to normalcy before 8.15 pm (i.e. 30 minutes before the actual market closing time), then there will not be any change in trading hours.
At 8.45 pm	9.00 pm – 9.30 pm	Trading Hours extended by 30 minutes	If the trading resumed to normalcy before 8.45 pm. The stock exchanges will extend the trading hours by 30 minutes.
After 8.45 pm	NA	No extension in trading hours post	If the trading resumes only after 8.45 pm , then the stock exchange will not extend trading hours.
For Security Contracts Traded Up to 11.30 pm
Time at which Communication send to Market Participants	Restarted Trading Time	Trading Hours Extended	Note
At 10.45 pm	11.00 pm - 11.30 pm	No change in trading hours	If the trading resumed to normalcy before 10.45 pm (i.e. 30 minutes before the actual market closing time), then there will not be any change in trading hours.
At 11.10 pm	11.25 pm–11.55 pm	Trading Hours extended by 30 minutes	If the trading resumed to normalcy before 11.10 pm. The stock exchanges will extend the trading hours by 30 minutes.
After 11.10 pm	NA	No extension in trading hours post	If the trading resumes only after 11.10 pm , then the stock exchange will not extend trading hours,
For Security Contracts Traded Up to 11.55 pm
Time at which Communication send to Market Participants	Restarted Trading Time	Trading Hours Extended	Note
At 11.10 pm	11.25 pm - 11.55 pm	No change in trading hours	If the trading resumed to normalcy before 11.10 pm (i.e. 30 minutes before the actual market closing time), then there will not be any change in trading hours.
After 11.10 pm	NA	No extension in trading hours post	If the trading resumes only after 11.10 pm , then the stock exchange will not extend trading hours.

Conclusion

SEBI has formulated an SOP for commodity derivatives exchanges to handle trading disruptions effectively. Exchanges must notify SEBI and market participants regarding the outages within 15 minutes and update them every 45 minutes until normalcy is restored. Trading hours may be extended by 30 minutes in certain conditions. The guidelines will take effect starting July 1, 2024. This SOP aims to ensure transparent communication and swift resolution of outages to maintain market stability and investor confidence. These measures aim to mitigate the impact of disruptions and provide clear protocols for exchanges to follow during such events.

Frequently Asked Questions

What is the purpose of SEBI's new SOP for commodity derivatives exchanges?

The SOP aims to ensure timely communication and effective handling of trading disruptions. It provides clear guidelines for exchanges to follow during outages, ensuring transparency and minimizing the impact on market participants.

What actions must exchanges take when a trading outage occurs?

Exchanges must notify SEBI immediately and inform market participants within 15 minutes of the outage through a broadcast message and their website. They must provide updates every 45 minutes until normal trading resumes.

How does the SOP affect trading hours during an outage?

If trading resumes at least 30 minutes before the scheduled market closure, trading hours remain unchanged. If the resumption is announced later, trading hours may be extended by 30 minutes. Specific guidelines are provided for different trading session timings.

When will the new guidelines come into effect?

The guidelines will take effect starting July 1, 2024.

What happens if an exchange fails to notify market participants in time?

If the affected exchange does not notify market participants by the specified times (4:45 pm/8:45 pm or 11:10 pm), there will be no extension of trading hours. The intimation must include details on when investors can log in to modify their positions.