NSE, BSE to act as backup trading venues for each other from April 2025. What it means for investors

The National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) will act as alternative trading venues for each other starting April 1, 2025, under a new business continuity framework introduced by the Securities and Exchange Board of India (SEBI). The market regulator issued a circular on Thursday detailing guidelines to address potential trading outages at stock exchanges, ensuring uninterrupted market access for investors.

“Upon discussion with exchanges, it has been decided that to begin with, NSE would act as an alternative trading venue for BSE and vice-a-versa. Both exchanges would prepare a joint SOP that would include plan to be invoked at the time of outage on one exchange along with flow of activity involving the affected exchange and its alternative trading venue and roles/responsibility of each of them,” SEBI said in the circular.

Under the new framework, NSE and BSE will provide a fallback mechanism in case one exchange faces technical glitches or outages during trading hours. SEBI noted that such outages could leave participants with open positions vulnerable to price risks amid market developments.

The interoperable system allows investors to hedge or net off open positions on one exchange by taking offsetting positions on the other. For example:

In cases where an exchange lacks a correlated index derivative, it may develop new products in compliance with regulatory norms.

If a technical outage occurs, the affected exchange must notify SEBI and the alternative trading venue within 75 minutes. The alternative exchange will activate the business continuity plan within 15 minutes of receiving the notification, as per the Standard Operating Procedure (SOP) outlined in the circular.

Both exchanges are required to jointly develop the SOP, which will detail operational workflows, responsibilities, and necessary changes in stockbroker and clearing corporation systems. The SOP must be submitted to SEBI within 60 days of the circular’s issuance.

The exchanges have also been directed to upgrade infrastructure and systems to comply with the circular; amend relevant bylaws and regulations; and inform members and stakeholders about the new provisions.