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The Securities and Exchange Board of India vide circular dated May 02, 2022, notified of the revised framework for System and Network Audit of Market Infrastructure Institutions. This circular supersedes the previously issued Circular no. SEBI/HO/MRD1/ICC1/CIR/P/2020/03 dated January 7, 2020. In this article, we will discuss the key highlights of the guidelines issued by SEBI in this regard.
Table of Contents
Stock exchanges, depositories and clearing houses form part of the Market Infrastructure Institutions. They are an important part of the nation’s vital economic infrastructure. As per a panel set up in 2010 under the chairmanship of former RBI Governor Bimal Jalan, the term ‘market infrastructure’ denotes such fundamental facilities/systems serving this capital market.
SEBI in its circular dated Jan 7, 2020, stated that due to the rapid technological advancements in the securities market and entailing risks that it poses to the efficiency and integrity of markets, stock exchanges, clearing corporations and depositories were mandated to conduct an annual system audit by a reputed independent auditor.
However, SEBI has felt the need to revise the aforementioned circular to keep up with the technological advancements in the securities market.
Market Infrastructure Institutions are required to undertake the following compliances:
For system and network audit the following points should be considered:
The following norms have been notified by SEBI in this regard:
The audit report shall:
The latest decision has been taken based on discussions with Market Infrastructure Institutions such as stock exchanges, clearing corporations, depositories and recommendations of the Technical Advisory Committee of SEBI[1]. The new framework will come into force with immediate effect, the Securities and Exchange Board of India said.
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