The Securities and Exchange Board of India (SEBI) recently introduced a groundbreaking API-based logging and monitoring mechanism (LAMA) framework to address the increasing concerns surrounding technical glitches in stockbrokers’ digital trading systems. We will delve into SEBI’s new LAMA framework, its definition of a technical glitch, its prerequisites, potential bottlenecks that stockbrokers face in adopting it, and how ManageEngine OpManager Plus can help stockbrokers overcome these challenges and comply with SEBI’s regulations effectively.
SEBI’s definition of a technical glitch
According to SEBI’s definition, a technical glitch refers to “any malfunction in the systems of [a] stock broker, including malfunction in its hardware, software, networks, processes, or any products or services provided by the stock broker.” These malfunctions may occur due to various factors, such as inadequate infrastructure, cyberattacks, procedural errors, process failures, or issues with third-party systems. To qualify as a technical glitch, the malfunction must lead to a stoppage, slowdown, or variance in the normal functions of the stockbroker’s system for a continuous period of five minutes or more.
Prerequisites and bottlenecks for LAMA compliance
To effectively adhere to SEBI’s LAMA framework and to avoid potential financial fines for repeated glitches, stockbrokers need to implement the following monitoring and compliance measures in their organization.
Establishing a monitoring system
Stockbrokers need a monitoring tool to continuously measure and monitor key parameters of their critical trading infrastructure, and they must send the monitored data to the stock exchange. Integrating a monitoring system with their existing IT infrastructure, especially if their current systems are not designed to support such capabilities, can be a huge hill to overcome.
Data transmission, reporting, and retention
Stockbrokers are required to notify the stock exchange within one hour of a glitch’s occurrence. Additionally, a preliminary incident report should be submitted to the exchange no later than the next trading day (T+1), with the date and time of the incident, the extent of its impact, and the steps taken to address it. SEBI also states that root cause analysis should be conducted to delve into the underlying reason for the glitch. This comprehensive analysis must be submitted to the stock exchange within 14 days of the incident.
Meeting these reporting obligations consistently can be challenging, especially during peak trading hours when the focus is on smooth operations rather than reporting. In addition to this, storing and managing such large volumes of data can be resource-intensive, and stockbrokers may need to invest in robust data storage solutions, which can be time- and resource-draining to set up.
SEBI states that “stockbrokers shall do capacity planning, for [their] entire trading infrastructure (i.e., server capacities, network availability, and the serving capacity of trading applications).” Additionally, “the installed capacity shall be at least 1.5 times (1.5x) of the observed peak load” during a calendar quarter.
Business continuity planning and disaster recovery sites
Per SEBI, “stockbrokers with a minimum client base across the exchanges, as may be specified by stock exchanges from time to time, shall mandatorily establish business continuity/[disaster recovery] setup[s]” to ensure business continuity in the event of disasters. But setting these up requires thorough planning, testing, and investments in redundant systems and infrastructure. For some stockbrokers, this may involve significant costs and resources.
See the SEBI circular from Nov. 25, 2022 for more details regarding these rules. In addition, following LAMA protocols may require stockbrokers to allocate additional resources and investments to acquire the necessary tools and technologies. Smaller brokerage firms or those with limited IT capabilities may find it challenging to invest in sophisticated monitoring solutions and disaster recovery setups.
How can OpManager Plus help you adhere to the LAMA framework?
OpManager Plus provides comprehensive monitoring of network resources, including the peak load, server capacity, and network bandwidth. By monitoring these parameters, stockbrokers can proactively assess their infrastructure’s capacity and identify potential bottlenecks. Also, when a technical glitch occurs, the software can identify the root cause swiftly by analyzing the relevant events and data. With the root cause identified, stockbrokers can take prompt, targeted action to resolve the issue, reducing downtime and minimizing the impact on the trading system.
OpManager Plus has a built-in LAMA to allow stock exchanges to monitor the key parameters of the critical systems, as specified by SEBI. OpManager Plus provides in-depth historical reports for the following parameters, helping you stay compliant with LAMA policies.
|Application monitoring parameters|
|Log monitoring||The monitoring system logs and event logs|
|Requests/second||The throughput of the application|
|Avg. response time||The latency of the application in microseconds|
|Trading API failure count||The failure count of APIs|
|Client authentication failure count||The failure count of client authentications|
|Network latency||The network latency in microseconds|
|Historical requests/second||The historical throughput of the application|
|Historical avg. response time||The historical latency of the application in microseconds|
|Hardware monitoring parameters|
|CPU utilization||The CPU utilized (as a percentage)|
|Memory utilization||The memory utilized (as a percentage)|
|Uptime||The uptime in minutes|
|Disk utilization||The disk space utilized (as a percentage)|
|Database monitoring parameters|
|Replication queue size||The queue size|
|Replication bandwidth utilization||The replication bandwidth utilized (as a percentage)|
|Network monitoring parameters|
|Packet error count||The packet error count|
|Bandwidth utilization||The bandwidth utilized (as a percentage)|
OpManager monitors and collects the data of these key parameters from various probes in different geographical locations. Then it sends the data to OpManager’s central server. The data is then sent to the LAMA server, and the brokers are notified if the data has been transmitted successfully or not.
OpManager Plus is a unified IT operations management (ITOM) solution with advanced full-stack monitoring and AIOps capabilities. OpManager Plus also streamlines server monitoring, application monitoring, bandwidth monitoring, configuration management, firewall security and compliance, and IP address and switch port management. This is why ManageEngine’s ITOM solutions are the ideal choice for over one million IT admins worldwide.