SEBI putting in place system to secure stock exchanges from cyberattacks
Mumbai, October 28, 2022
Under the new system, both the bourses will store their data at each others’ servers to ensure cyberattacks do not affect market functioning
Come March and stock trading in India will be less vulnerable to cyber attacks.
Madhabi Puri Buch, chairperson of market regulator SEBI, revealed on Friday that they were working with the BSE and the National Stock Exchange (NSE) in developing a system to mitigate risk of cyber attacks. SEBI or the exchanges have never given out data on whether Indian markets had ever faced cyber attacks but the chairperson said, under the new system both the exchanges will store their data at each others’ servers to ensure cyber attacks do not affect the market functioning. “We worry a lot about cyber security. When this system kicks in, we would have prevented something (like a cyber attack). This has never been done in the world. And we will be the first,” Buch said. She said the system will be operational from March. Buch was speaking at an event organised by IIM-Bangalore. According to Buch, if exchange A were to go down and SEBI determined that it was stuck by a cyber attack and even the disaster recovery site may not come up on time, the regulator will press the panic button for the data to be uploaded on the systems of exchange B. This way, markets will remain functioning even if any one exchange faced a cyber attack.
“When the cyber attack happens, and it will happen one day, we all know that. When this system kicks in, we would have prevented something. Nobody will see it as something (cyber attack) happened. (But see that) it didn’t happen”, Buch said. Yet, she feared that the modus operandi of wrongdoers, too, will continue to evolve.
“ Sarkaari daftar’ like SEBI does not breathe without data and technology. That is the future. Regulators will always be a step behind but hopefully not too many. “The idea is to make it difficult for people to do bad things.” Globally, there have often been fears of stock exchanges have been hit by cyber attacks but there are never official details that have been revealed by any country. In December 2021, 10 countries led by Israel had simulated a major cyber attack on global financial system, which revealed the scale of impact it could have on the world markets. The demonstration evolved over a 10-day time frame and showed how sensitive data put out on dark web with fake news could cause havoc or stock market crash and run on the banks. The attack featured impact on global foreign exchange, bond markets, liquidity, integrity of data and transactions between importers and exporters.
In her speech on Friday, Buch suggested that a line had to be drawn influencers and their impact and SEBI cannot act against the wrongdoings unless there was a contract between an influencer and a person who followed their financial advice. She said the exchanges had already stepped up their warnings against unsolicited stock tips and such advice. Buch said that SEBI was constantly using data for back-testing of proposed regulations as well as existing ones for better policy making.
[The Hindu Business Line]
