The Security and Exchange Board of India (SEBI) has said that from April 2016 commodities traders will be subject to the same software testing guidelines that apply to Indian securities exchanges
SEBI’s 2013 guidelines set out how brokers operating on the securities exchanges must test software; how the exchanges must implement an approval process for the software and, finally, how exchanges must fine brokers for missed tests and software malfunctions.
The regulator’s 2013 circular on testing also said that brokers should create simulated test environments and organise regular mock testing sessions and user acceptance tests. Failure to participate in mock trading sessions without good cause should result in a suspension of trading rights of the broker, and exchanges should also look to fine broker in the case of software malfunctions, SEBI said.
The regulator also said exchanges should help brokers organise insurance to mitigate the risks of technical failures and also investigate where liability for failures might rest with a third party software vendor.
In 2014 SEBI issued a further circular that introduced fast-tracking approval for software that had been either been modified in order to fix bugs, altered following a change in the exchange’s systems, or had already been previously tested in a mock environment. The 2014 circular also said that software alterations that only modified the “look and feel” of an application do not require any testing.
