Testing of software used in or related to Trading and Risk Management

Last updated: 25 November 2020

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The Securities and Exchange Board of India (SEBI) has updated its guidelines regarding the testing of trading and risk management software. Previously, mandatory mock trading sessions were required for testing new or changed software. However, SEBI has now made these mock sessions optional.

Securities and Exchange Broad of India CIRCULAR SEBI/HO/MRD1/DSAP/CIR/P/2020/234 November 24, 2020 All Recognised Stock Exchanges Dear Sir / Madam, Subject: Testing of software used in or related to Trading and Risk Management 1. SEBI videCirculars CIR/MRD/DP/24/2013 dated August 19, 2013andCIR/MRD/DP/06/2014 February 7, 2014came out with guidelines on Testing of software used in or related to Trading and Risk management. Subsequent to the above, SEBI has received various su

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FAQ :

The main change is that mandatory mock trading sessions for testing new or changed trading and risk management software are now optional.

Stock exchanges can make mock trading sessions optional if they provide a suitable simulated test environment for members to test new or changed software.

The test environment must be available to all members for at least two hours after market hours, on at least two trading days a week. It must also provide data from at least one trading day in all segments, no older than one month.

All trading members with approved Algorithms (unless they only use Exchange-provided front end and/or ASP services) must participate in the simulated environment at least once a month, regardless of whether their algorithm has changed.

Stock exchanges must provide a daily log of member participation in the simulated environment to participating members and a summary report to SEBI in their monthly development report.

Notification No : SEBI/HO/MRD1/DSAP/CIR/P/2020/234
Source : https://www.sebi.gov.in/legal/circulars/nov-2020/testing-of-software-used-in-or-related-to-trading-and-risk-management_48244.html

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