Mumbai, Feb 25 The Securities and Exchange Board of India (SEBI) on Tuesday imposed a penalty of Rs 5.05 crore on the Indian Clearing Corporation (ICCL), a subsidiary of the Bombay Stock Exchange (BSE), for failing to comply with cyber security and system audit-related rules.
The SEBI conducted an inspection of the ICCL between December 2022 and July 2023 and later issued a show-cause notice in October 2024.
After reviewing the findings, the market regulator found several violations in the ICCL’s operations.
One of the key issues was that the ICCL submitted its network audit report to the SEBI without any comments from its management or board.
According to the rules, the audit report should first be reviewed by the governing board of market infrastructure institutions, and their feedback must be included before submitting it to the SEBI within a month of the audit’s completion.
The SEBI also found that the ICCL did not maintain an up-to-date inventory of IT assets, including software classifications.
Although the ICCL conducted cyber audits twice a year, the issues raised in these audits were not resolved within the required time.
Another major violation was related to the ICCL’s disaster recovery system.
The SEBI guidelines require a one-to-one match between the primary data centre (PDC) and disaster recovery site (DRS), but the ICCL failed to ensure this.
Sebi’s Quasi-Judicial Authority, G Ramar, referred to the Dr Bimal Jalan Committee’s 2010 report on market infrastructure institutions while issuing the order.
The regulator directed ICCL to pay the penalty within 45 days.
"These institutions (i.e., stock exchanges, depositories and clearing corporations) are systemically important for the country’s financial development and serve as the infrastructure necessary for the securities market. These institutions are collectively referred to as Market Infrastructure Institutions (MIIs)… They are, therefore, ‘vital economic infrastructure’. The recent financial crisis has shown the importance of financial institutions to economic stability," the committee report said.
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