The integrity of financial markets relies heavily on strong cyber security measures. SEBI’s Cyber Security & Cyber Resilience Framework is designed to equip stock exchanges, depositories, mutual funds, and asset management companies with essential guidelines to safeguard their operations. This framework addresses critical aspects of cyber security to ensure that financial entities remain resilient against threats, maintain data integrity, and uphold investor confidence.
SEBI Cybersecurity and Cyber Resilience Framework
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For Stock Exchanges and Depositories
Why It Matters
- Stock exchanges and depositories play a crucial role in managing and safeguarding vast amounts of sensitive financial data.
- With the rise of digital transactions and technological advancements, maintaining a robust cyber security and resilience framework is essential to protect data and uphold trust in the financial system.
Key SEBI Circulars
- SEBI/HO/MIRSD/CIR/PB/2018/147: This circular outlines the foundational cyber security measures required for stock exchanges and depositories, focusing on establishing a secure environment for handling financial transactions and data.
- SEBI/HO/MIRSD/TPD/P/CIR/2022/80: This updated circular provides enhanced guidelines to address emerging threats and reinforces the need for ongoing compliance with updated cyber security practices.
SEBI’s Expectations
- Regulatory Updates: Amend bye-laws and rules to integrate the new cyber security standards.
- Communication: Ensure all members are informed about the new guidelines and make them publicly accessible on official websites.
- Compliance Reporting: Regularly report to SEBI on the status of implementing these guidelines.
- Continuous Improvement: Adapt practices to meet evolving cyber security challenges and ensure sustained compliance.
Focus Areas
- Governance: Establish a strong governance framework to manage cyber risks effectively.
- Identification: Continually assess potential threats and vulnerabilities.
- Protection: Implement comprehensive measures including access controls, network security, and data protection.
- Monitoring and Detection: Develop robust systems to monitor and identify security incidents.
- Response and Recovery: Create and regularly test plans for responding to and recovering from cyber incidents.
- Training: Provide ongoing education to staff about the latest cyber threats.
- Vendor Management: Ensure third-party systems meet security standards.
For Mutual Funds and Asset Management Companies (AMCs)
Why It Matters
Mutual funds and AMCs are integral to the financial markets, managing significant assets and sensitive information. With technological advancements accelerating, it is crucial for these entities to have a robust cyber security and resilience framework to protect against data breaches and ensure operational efficiency.
Key SEBI Circulars
- SEBI/HO/IMD/DF2/CIR/P/2019/12: This circular details the cyber security and resilience requirements for Mutual Funds and AMCs. It emphasizes the need for comprehensive cyber audits and adherence to updated security protocols.
SEBI’s Expectations
- Implementation: Adopt and integrate the outlined framework policies into operational practices.
- Cyber Audits: Conduct comprehensive cyber audits at least twice a year and submit compliance reports, including a certification from the MD/CEO.
- System Updates: Update internal policies and procedures as required by SEBI’s guidelines.
- Compliance Actions: Ensure that the necessary systems and processes are in place to meet the requirements outlined in the circular.
Focus Areas
- Governance: Develop a strong governance framework to manage cyber security effectively.
- Identification: Regularly assess risks and vulnerabilities.
- Protection: Implement measures for access control, network security, and data protection.
- Monitoring and Detection: Set up systems for continuous monitoring and threat detection.
- Response and Recovery: Formulate and test plans for dealing with and recovering from cyber incidents.
- Training: Ensure staff are trained to handle the latest cyber threats.
- Vendor Management: Confirm that third-party vendors comply with security standards.
- Periodic Audit: Perform regular audits to ensure ongoing compliance.
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Frequently asked questions
Who must comply with the SEBI Cybersecurity Framework?
All market intermediaries regulated by SEBI, including stock exchanges, depositories, clearing corporations, and other entities involved in securities trading and settlement, must comply with this framework.
How does non-compliance with the SEBI framework affect my business?
Non-compliance can result in penalties, regulatory sanctions, and reputational damage. It may also expose your business to heightened cybersecurity risks, leading to potential financial and operational impacts.
What are the key components of the SEBI Cybersecurity Framework?
The framework includes several key components, such as:
- Identification of Critical Assets: Recognizing assets critical to business operations and assessing their vulnerabilities.
- Protection Mechanisms: Implementing robust security controls, including firewalls, intrusion detection/prevention systems, and data encryption.
- Monitoring: Continuous monitoring of IT systems and networks to detect and respond to cyber threats.
- Incident Response: Establishing a comprehensive incident response plan to manage and mitigate the impact of cyber incidents.
- Audit and Reporting: Regular audits, risk assessments, and compliance reporting to SEBI.
Why is the SEBI Cybersecurity and Cyber Resilience Framework important for my business?
Compliance with the SEBI framework is essential for maintaining the trust and confidence of investors and stakeholders. It helps protect your business from cyber threats that could disrupt operations, lead to financial losses, or damage your reputation.
How does the SEBI framework impact our relationship with customers and investors?
Compliance with the SEBI framework strengthens your relationship with customers and investors by ensuring the security of their data and transactions. It demonstrates your commitment to safeguarding their interests, which can enhance trust and loyalty.
