Sebi plans a three-tier structure to monitor cybersecurity threats

New Delhi, September 5 () The Sebi regulator has planned a three-tier structure to strengthen cybersecurity in the stock market and plans to implement next-generation data and technology analysis to meet various challenges.

Sebi plans to establish a Cybersecurity and Compliance Reporting System for regulated entities that will collaborate with the government, as well as with other national and international regulators to address such vulnerabilities, the capital markets regulator said in its annual report for 2018-19 .

In addition, an index of cyber capacity will be developed to assess the preparation and resilience of cybersecurity of market infrastructure (MII) institutions, which include stock exchanges, corporations and clearinghouses, said the Securities and Exchange Board from India (Sebi).

This index will not only improve the supervision of cybersecurity implementations, but will also help measure the level of implementation of the guidelines issued by Sebi from time to time, he added.

Sebi has planned a three-tier structure in the stock market to monitor events related to cybersecurity and take the measures deemed necessary in the interest of the stock market, the annual report said.

In addition, the regulator plans to request the stock exchanges to improve their analytical capabilities to improve the analysis of the presentations made by publicly traded companies in XBRL format, an electronic format for the communication of commercial and financial data.

A smooth and uninterrupted operation of the operations of the MII is essential to guarantee the continuity of the stock market. Therefore, it is very important for MII to constantly monitor the performance of their systems and update/improve their systems to avoid any possibility of technical failure, said Sebi.

Based on the experience of technical incidents of MII failures in the past, the regulator plans a framework for timely and adequate notification of such incidents, as well as a penalty mechanism to act as a deterrent.

Sebi plans to implement data analysis and next-generation technologies to meet various challenges in the market. In addition, it aims to develop an inspection methodology based on technology for the regulation of various intermediaries in the stock market.

A project is currently being carried out to incorporate data from various intermediaries in the Sebi database and develop algorithms to generate cases of non-compliance with regulatory guidelines along with alerts about possible non-compliance, said the market regulator. The regulator would also encourage the adoption and use of financial technology to develop and maintain an efficient, fair and transparent stock market ecosystem, Sebi added. SP DRR