In a calibrated regulatory adjustment, the Securities and Exchange Board of India has revised its technology capacity planning norms for stock exchanges and clearing corporations operating in the commodity derivatives segment. The decision follows the regulator’s assessment that system infrastructure in this segment has remained significantly under-utilised relative to the mandated capacity thresholds.

Under the earlier framework prescribed in the SEBI Master Circular for Market Infrastructure Institutions (MIIs), exchanges were required to maintain installed system capacity at least four times the peak order load. This rule was originally framed to ensure resilience against traffic spikes and systemic stress. However, SEBI’s review found that in the commodity derivatives segment, actual usage levels were far below this benchmark for a sustained period.

Responding to this gap between regulatory prescription and operational reality, SEBI has now reduced the capacity multiplier. Going forward, MIIs will be required to maintain installed capacity at a minimum of two times the projected peak load for commodity derivatives trading systems.

This change represents a meaningful shift in how the regulator balances resilience with efficiency. Instead of mandating uniform over-provisioning, SEBI has moved toward a more usage-linked framework that aligns infrastructure requirements with observed demand while retaining oversight mechanisms to prevent systemic vulnerabilities.

Importantly, the easing of the multiplier does not imply a dilution of safeguards. SEBI has embedded a strong performance-based trigger within the revised framework. If the utilisation of any critical system component in the commodity derivatives segment crosses 75 percent of installed capacity, the concerned exchange or clearing corporation must immediately initiate corrective measures. These could include system optimisation, application fine-tuning, or capacity augmentation.

Such measures must be undertaken under the supervision of the Standing Committee on Technology (SCOT), ensuring that governance oversight remains integral to the response process.

Further, SEBI has mandated that this utilisation-based trigger be formally embedded into each MII’s Capacity Planning and Real Time Performance Monitoring Policy. This requirement ensures that monitoring is not ad hoc but structured, documented, and continuously reviewed.

The regulator has also extended the broader framework on capacity planning and real-time performance monitoring already applicable to other segments to commodity derivatives as well. The revised multiplier and utilisation trigger form the key modifications within this extension.

Exchanges and clearing corporations have been directed to frame segment-specific policies reflecting these changes and submit them to SEBI within three months. These policies must first receive approvals from SCOT and the respective governing boards. The circular will come into effect on May 11, 2026.

From a market infrastructure standpoint, this move reduces the burden of maintaining excess idle capacity in a segment where trading volumes have not justified such provisioning. Technology infrastructure for exchanges is capital intensive, involving hardware redundancy, data centre resilience, network bandwidth, and disaster recovery systems. A four-times multiplier often translated into infrastructure that remained idle but still required maintenance, upgrades, and compliance audits.

By lowering the requirement to two times projected peak load, SEBI is allowing MIIs to deploy capital more efficiently without compromising market integrity. This is particularly relevant for commodity derivatives, which historically witness lower order intensity compared to equity derivatives and cash segments.

The change also signals SEBI’s willingness to adopt a data-driven regulatory approach rather than a one-size-fits-all framework across segments.

Commodity derivatives trading in India has not seen the same depth or retail participation as equity derivatives. Exchanges have had to comply with technology norms designed for high-throughput environments even when actual system load did not warrant it. This regulatory fine-tuning acknowledges the structural difference between segments.

For MIIs, this translates into lower capital allocation toward idle technology assets and better cost efficiency. Over time, this could improve operating margins for exchanges and clearing corporations, especially those with significant commodity derivatives exposure.

For the market infrastructure ecosystem, including exchanges, clearing corporations, and technology vendors servicing them, this change alters the planning approach. Rather than building capacity for hypothetical peaks, infrastructure decisions can now be more closely tied to projected load with a clear utilisation threshold acting as a safety valve.

This may also influence how future technology procurement, data centre expansion, and disaster recovery investments are planned in the commodity segment.