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TMI BlogTesting of software used in or related to Trading and Risk ManagementX X X X Extracts X X X X X X X X Extracts X X X X ..... ftware. 2. Further, vide various circulars issued by SEBI on Internet Based Trading (IBT), Direct Market Access (DMA), Securities Trading using Wireless Technology (STWT), Smart Order Routing (SOR) and Algorithmic Trading (AT), stock exchanges have been directed to ensure that various requirements specified in such circulars, including requirements related to systems, operations, testing, etc., are implemented and the systems of stock broker / trading member facilitate orderly trading and integrity of the securities market. 3. Various incidents of malfunctioning of software used by market participants have been observed in Indian as well as foreign securities market in the recent past. Such incidents have emphasized the need for a str ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that have undergone change to such testing facility shall be mandatory for market participants, before putting it in use. (ii) Mock testing (a) Stock exchanges shall organize mock trading sessions on regular basis, atleast once in a calendar month, to facilitate testing of new software or existing software that has undergone any change of functionality, in a close-to-real trading environment. Stock exchanges shall suitably design and plan such mock trading sessions to ensure maximum participation and sufficient trading volumes for the purpose of testing. (b) Stock exchanges shall mandate a minimum time period for such testing in the mock trading sessions. (c) In order to improve the efficacy of the mock trading sessions, all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ock broker / trading member has failed to participate in such mock trading sessions, stock exchange shall call for reasons from the stock broker / trading member and if found unsatisfactory, shall suspend the proprietary trading rights of the stock broker / trading member for a minimum period of one trading day. 6.5. For pre-approval / periodic system audit of Computer-to-Computer Link (CTCL) or Intermediate Messaging Layer (IML), IBT, DMA, STWT, SOR and AT, stock brokers / trading members shall engage a system auditor with any of the certifications specified vide SEBI circular dated CIR/MRD/DP/16/2013 dated May 21, 2013. While finalizing the system auditor, stock brokers / trading members shall ensure the system auditor does not have an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by stock brokers / trading members 8.1. Stock brokers / trading members shall submit an undertaking to the respective stock exchanges stating the following at the minimum: (i) M/s (name of the stock broker / trading member) will take all necessary steps to ensure that every new software and any change thereupon to the trading and/or risk management functionalities of the software will be tested as per the framework prescribed by SEBI / stock exchange before deployment of such new / modified software in securities market. (ii) M/ s (name of the stock broker / trading member) will ensure that approval of the stock exchange is sought for all new / modified software and will comply with various requirements specified by SEBI or the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to the desirous stock brokers / trading members or software vendors within a period of fifteen working days from the date of receipt of such request for sharing of API. 9.5. Further, stock exchanges shall not selectively release updates / modifications, if any, of the existing API specifications to few stock brokers / trading members or software vendors ahead of others and shall provide such updated / modified API specifications to all stock brokers / trading members and software vendors with whom the earlier API specifications were shared. 10. Penalty on malfunction of software used by stock broker / trading member : Stock exchanges shall examine the cases of malfunctioning of software used by stock brokers / trading members and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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