The Securities and Exchange Board of India (SEBI) on May 05, 2023, issued a Circular regarding the Testing Framework for the Information Technology (IT) systems of the Market Infrastructure Institutions (MIIs)
This Circular aims to protect the interests of investors in securities and to promote the development of and regulate the securities market.
This circular shall come into force with immediate effect.
The following has been stated namely: -
• The MIIs are directed to ensure the following requirements while establishing the testing framework of their IT systems/applications: -
(i) All MIIs should do extensive testing, validation, and documentation whenever new systems/ applications or changes to existing systems/applications are introduced before the deployment in a production/live environment.
(ii) A comprehensive methodology for system testing, functional testing, and application security testing should be established and the same shall be approved by the Standing Committee on Technology (SCOT) of respective MIIs. The scope of testing shall, inter-alia, cover business logic, system function, security controls, and system performance under load and stress conditions. Any dependency on the existing systems shall be properly tested.
(iii) Testing should be carried out in a separate environment that replicates/mirrors the production environment in order to minimize any disruption
(iv) All MIIs shall have the practice of traceability matrix to ensure that the test plan covers all intended functionality of the IT system and application. e) All MIIs shall adopt the practice of using automated testing techniques to run the test cases automatically, which may increase the depth and scope of tests and ultimately help to improve the software quality.
(v) All MIIs shall establish policies/procedures on the use of third-party systems/applications/software codes to ensure these systems are subject to review and testing before they are integrated with the systems of the MIIs.
(vi) All MIIs shall ensure that core code components operate as intended and do not produce unintended consequences. Further, any new code shall not have any impact on the existing functionality.
(vii) All MIIs shall also ensure that Application Programming Interface Testing is done so that the concerned application can interact with other applications without causing disruptions of any kind.
• The stock exchanges, clearing corporations, and depositories are required to take necessary steps to put in place systems for implementation of the circular, including necessary amendments to the relevant bye-laws, rules, and regulations, if any.
• The MIIs are advised to submit the testing framework of all their IT systems after approval of SCOT within 30 days from the date of this circular.
[Circular No. SEBI/HO/MRD/TPD/P/CIR/2023/65]
