Regulatory Push for Tech resilience

India’s securities market regulator has taken a step to make its exchanges more resilient. The Securities and Exchange Board of India (SEBI) has proposed a new “IT Resilience Index” (ITRI) to check the health of technology platforms that drive trading, clearing, and settlement.

SEBI wants to ensure that investors have confidence in the markets. A malfunction in the technology stack can erode investor confidence quickly. By creating a set of measurable criteria, SEBI aims to give exchange boards, oversight committees, and market participants a clear view of where vulnerabilities lie and how they compare across institutions.

IT Resilience Index (ITRI): A Framework for Assessment

The ITRI will be calculated on a quarterly basis using a standardized checklist of parameters. SEBI intends the index to be a living document, updated as new threats emerge and as market participants adopt newer architectures.

The index will have two main pillars: availability and security. These two pillars account for 40% of the overall rating. The remaining 60% is distributed among a suite of operational attributes that define a robust technology ecosystem.

IT Resilience Index (ITRI): A Framework for Assessment The ITRI will be calculated on a quarterly basis using a standardized checklist of parameters.

Weightages and Parameters: A Closer Look

The index assigns 10% each to the following parameters:

• Integrity – ensuring data is accurate, complete, and tamper-proof.
• Governance – clear policies, roles, and accountability for IT decisions.
• Reliability and Monitoring – continuous oversight of system performance and automated alerts.
• Business Continuity – preparedness for disaster recovery and fail-over scenarios.
• Modularity and Flexibility – the ability to adapt components without disrupting the whole.

Two additional factors – scalability and incident handling – receive lower weightings, reflecting SEBI’s assessment that most current outages stem from governance lapses rather than sheer capacity constraints.

Impact on Market Integrity and Stability

Introducing a transparent scorecard is expected to reshape how exchanges allocate resources. A sub-threshold rating will trigger mandatory disclosures to oversight committees within 48 hours, compelling senior management to act swiftly.

Market participants – brokerage houses, algorithmic traders, and foreign investors – will gain a reliable metric to assess the operational risk of each venue. Early indications suggest that the index could influence cost structures.

Strategic Perspective: The Long-Term View

India’s ITRI arrives at a moment when global regulators are grappling with similar challenges. The International Organization of Securities Commissions (IOSCO) recently praised Brazil’s B3 for its outage-transparency framework.

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By adopting a granular, weighted scoring system, SEBI positions itself to set a benchmark for emerging markets seeking to codify tech resilience. The index could evolve into a cross-border standard, influencing how exchanges and market participants prioritize tech resilience.

A sub-threshold rating will trigger mandatory disclosures to oversight committees within 48 hours, compelling senior management to act swiftly.

The ITRI is more than a compliance checkbox; it is a strategic tool that aligns the incentives of regulators, exchanges, and market participants around a single goal: a market that never stops because of a technical glitch.