Business Continuity for Clearing Corporations through Software as a Service (SaaS) Model

SEBI vide circular dated December 20, 2023 has issued Business Continuity for Clearing Corporations through Software as a Service (SaaS) Model. Outline of SaaS model for RMS is as follows:

Each CC shall design a system to run its RMS related operations, to risk manage trades for its clearing members, using the Risk Management Systems related software components of another CC. This instance would be called SaaS-RMS. For instance, when NCL designs SaaS-RMS using software of ICCL, NCL would be considered as client CC and ICCL would be considered as service provider CC.

The arrangement between Client CC and Service Provider CC, in the context of design of SaaS-RMS shall be as below:

  1. The SaaS-RMS instance would be designed to accept the trade data from exchanges; online collateral, positions etc. from the CC(s) and depository data as required from depositories. The client CC would carry out all the functions related to online real time risk management at the SaaS-RMS. This would ensure that if the SaaS-RMS is invoked by client CC, it would be in a ready state to take over operations.
  2. Responsibility of service provider CC would be to provide the functioning software for RMS and that for other associated processes to the client CC. Beyond that, it would be responsibility of the client CC to operate SaaS-RMS in normal course and on the day it is invoked. Further, client CC would put in place systems to detect latency/performance issue of SaaS-RMS to flag off such anomalies to the concerned MII(s).
  3. Each CC shall also make necessary arrangements for members to login to SaaS-RMS through a portal and view/add collateral and its utilization etc. in case SaaS-RMS is invoked by CC.
  4. As the key purpose of the exercise is to ensure ability to risk manage trades, all the functions pertaining to risk management/collateral shall be made available by the client CC in the SaaS-RMS i.e.: (a) Intraday risk management of trades (b) Real time computation of margins and member utilization (c.) Violation intimation to Exchanges (d.) Response to Exchanges for orders of members in RRM (e.) Online Custodial Participant Modifications / CP confirmations f. Collateral addition by members (g.) Receipt of Margin pledge / re-pledge data (h.) Sending Margin pledge / re-pledge data (i.) Member interface for Margin display, Custodial confirmations and Collateral addition/ allocation un-allocation (j.) Handling of Early Pay-In (EPI) instructions.