Sebi raises concerns over location of MCX’s disaster recovery site

Mumbai: The Securities and Exchange Board of India (Sebi) has raised concerns about Multi Commodity Exchange Ltd’s (MCX) disaster recovery (DR) site being located in the same seismic zone, Mumbai, where trading on the bourse takes place, two people with direct knowledge of the matter said.

The DR site is the Gujarat International Finance Technical Tec-City (GIFT), which falls in the same seismic zone.

“The market regulator had sent a letter early this year stating that MCX’s DR site was in violation of Sebi regulations which require it to be in a different earthquake prone zone. Sebi could ask the exchange to shift its recovery site to another location,” said the first person on condition of anonymity.

A spokesperson for MCX declined to comment. An email sent to Sebi did not immediately result in a response.

Sebi had issued norms in 2012 for business continuity plans and disaster recovery to ensure a disruption in trading activity does not impact the market integrity of stock exchanges. This was subsequently extended to commodity exchanges in April 2017.

“The DR site should be set up sufficiently away, i.e. in a different seismic zone, from Primary Data Centre (PDC) to ensure both DR site and PDC are not affected by the same disasters,” according to the Sebi guidelines.

MCX had set up its DR site at GIFT city last year and had subsequently in September conducted live and mock trading sessions. It completed all trading, surveillance, risk, clearing and settlement operations from its site, required under Sebi guidelines.

“Some routine queries were sent to MCX to which it has already replied. These queries were based on the interpretation of the Sebi circular. The two are in seismic zones but the tectonic plates are different. This doesn’t pose any risks and safeguards the disaster recovery set-up. Even globally this is the standard,” said the second person who also spoke on condition of anonymity.

The DR site is a replica of the primary site which ensures all exchange data is replicated on a real time basis. “Sebi is yet to give a final opinion on the same. If it finds MCX’s reply unsatisfactory and not scientifically rational, then it could ask MCX to move the site to a different location,” said the first person.

BSE has a primary DR site in Hyderabad and a back-up site in Navi Mumbai. The Navi Mumbai site also falls in the same seismic zone as Mumbai, following which BSE decided to make Hyderabad its primary DR site in April. National Stock Exchange of India Ltd has a disaster recovery site in Chennai.