Framework for Adopting Cloud Services by Stock Exchanges

What’s in today’s article?

• Why in News?
• What is the Background behind the Unveiling of the Framework?
• What is the Framework for Adopting Cloud Services?

Why in News?

• The Securities and Exchange Board of India (SEBI) unveiled a framework for the adoption of cloud services by stock exchanges, clearing corporations and other regulated entities (REs).

What is the Background behind the Unveiling of the Framework?

• Cloud computing refers to the on-demand delivery of computing services (storing, managing and processing data, running applications and other software) over the internet or a network of remote servers.
• Instead of buying and maintaining computer products and services, one can pay to use a cloud computing service saving the time, effort and cost of doing it.
• It is becoming increasingly popular for delivering IT services, thanks to its scalability, ease of deployment, and lower maintenance costs.
• However, it also introduces new cyber security risks and challenges that businesses need to be aware of.

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What is the Framework for Adopting Cloud Services?

Image Caption: Applicability of SEBI’s Cloud Framework

• A crucial addition to SEBI’s existing guidelines on cloud computing, the framework will cover –
  • Governance, Risk and Compliance (GRC),
  • Selection of Cloud Service Providers (CSPs),
  • Data ownership and data localisation,
  • Due-diligence by REs,
  • Security controls,
  • Legal and regulatory obligations, etc.
• The main objective of the framework is –
  • To identify and address the critical risks associated with cloud computing and
  • To establish mandatory control measures that REs must implement before adopting cloud services.
• The framework will come into force immediately for all new or proposed cloud onboarding assignments or projects of the REs.
• For REs that are currently availing cloud services should ensure that wherever applicable, all such arrangements are revised and they should be in compliance with the framework within 12 months.

Q1) What is cloud computing?

Cloud computing is the on-demand availability of computer system resources, especially data storage (cloud storage) and computing power, without direct active management by the user.

Q2) How does SEBI Regulate the Stock Market?

While trading in the Indian stock market, investors and traders have to execute trades while abiding by rules to promote fairness. SEBI’s role is to carry out functions that meet with the tenets of SEBI regulations.

Source: SEBI unveils framework for adopting cloud services by stock exchanges | Taxmann.com

Video: https://www.youtube.com/watch?v=mxT233EdY5c