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TMI BlogStandard Operating Procedure for handling of technical glitches by Market Infrastructure Institutions (MIIs) and payment of “Financial Disincentives” thereofX X X X Extracts X X X X X X X X Extracts X X X X ..... mechanisms stipulated by SEBI such as Business Continuity Planning, Disaster Recovery policies, System Audit etc. 3. The general practice in the computing/technology industry to deal with business disruption/unavailability of services, is to work with specified downtime and for downtimes beyond such specified time, a pre-defined penalty structure is included in Service Level Agreement. 4. Considering the criticality of smooth functioning of systems of MIIs (as any disruption adversely impacts all classes of investors / market participants as well as the credibility of the securities market), specifying a pre-defined threshold for downtime of systems of MIIs becomes desirable. For any downtime or unavailability of services, beyond such pre-defined time, there is a need to ensure that Financial Disincentive is paid by the MIIs as well as Managing Director (being the executive head in-charge of all the day to day operations) and Chief Technology Officer (being the executive head in- charge of technology) of the MII. This will encourage MIIs to constantly monitor the performance and efficiency of their systems and upgrade/ enhance their systems etc. to avoid any possibility ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness disruption Standing Committee on Technology (SCOT) of MII Governing Board of MII 2. Business disruption SCOT of MII Governing Board of MII SEBI Business disruption shall mean either stoppage or variance in the normal functions/operations of systems of the MII thereby impacting normal/regular service delivery of the MII. 2.1. With regard to incidents resulting in business disruption, the following shall be submitted by the MIIs to SEBI: (i) Information of technical glitch on immediate basis but not later than 2 hours from the time of occurrence of the glitch; provided that glitches of the nature of a disaster- as defined in SEBI Circular dated March 22, 2021 having reference number SEBI/HO/MRD1/DTCS/CIR/P/2021/33 - shall be reported immediately upon declaration of disaster. (ii) Preliminary report within 24 hours of the occurrence of the glitch. (iii) Comprehensive Root Cause Analysis (RCA) report and corrective action taken to address the technical glitch within 21 days of the incident. Such report shall be submitted to SEBI, after pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddress technical glitch within the timeline specified by TAC/SEBI, the following progressive slab-wise financial disincentive shall be paid from the expiry of the timeline specified by TAC/ SEBI: S No. No. of working days during which failure continues (i.e. after expiry of the timeline specified by TAC/ SEBI) Financial disincentive to be paid by the MII (Rs.) i. First 15 working days 2 lakh per working day ii. Subsequent 15 working days 3 lakh per working day in addition to S No. (i) above iii. Beyond 30 working days 25 lakh in addition to S No (i) and (ii) above Failure to declare disaster within stipulated timelines 3. Vide SEBI Circular dated March 22, 2021 having reference number SEBI/HO/MRD1/DTCS/CIR/P/2021/33, it has been mandated that, in the event of disruption of any one or more of the Critical Systems , the MII shall, within 30 minutes of the incident, declare that incident as Disaster . In case of delay in declarati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quivalent (Rs.) i. Financial disincentive on MII 10% of average of standalone net profit for previous two financial years or ₹ 2 cr., whichever is higher. ii. Financial disincentive on MD and CTO of MII separately 10% each of their annual pay (both fixed and variable components) for the financial year when the disaster occurred Failure to restore normalcy in cases of business disruption, not being in the nature of a Disaster 6. In the event of any business disruption, which is not required to be declared as Disaster as per SEBI circular dated March 22, 2021 having reference number SEBI/HO/MRD1/DTCS/CIR/P/2021/33, if an MII fails to restore normalcy of operations within 75 minutes of the incident, the following slab wise financial disincentive shall be paid by the MII: S No. Failure to Restore normalcy within Financial disincentive (Rs.) i. 75 minutes to 3 hours of the incident ₹ 50 lacs ii. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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