SEBI introduces an IT testing framework for stock exchanges

The Securities and Exchange Board of India (SEBI) has introduced a comprehensive testing framework for information technology (IT) systems of market infrastructure institutions (MIIs) such as stock exchanges, clearing corporations, and depositories. The newly implemented framework will enable MIIs to conduct risk assessments prior to deploying IT systems in live or production environments. The framework mandates MIIs to undertake extensive testing, validation, and documentation whenever new systems or changes to existing systems are introduced, covering business logic, system function, security controls, and system performance under load and stress conditions. MIIs must also establish policies and procedures for third-party systems or software codes to ensure they are reviewed and tested before integration with their systems. MIIs will also need to perform white box or structural testing to analyse data flow, control flow, information flow, coding practices, exception and error handling within the system. SEBI mandates that any system defects or software bugs identified during testing must be promptly addressed and resolved. MIIs must submit the testing framework of all their IT systems to the Standing Committee on Technology within 30 days for approval.