The decision comes after SEBI held discussions with both exchanges regarding their roles in this new arrangement. The NSE and BSE will have to develop a joint Standard Operating Procedure (SOP) detailing the plan to be invoked during an exchange outage.

The SEBI said that the exchanges would prepare a joint Standard Operating Procedure (SOP) to handle scenarios where one exchange experiences a disruption

This is to reduce price risk for investors as announcements can come from companies and alter the share price at the time of an outage at a stock exchange

SEBI said that for identical or correlated products-- single stock derivatives, index derivatives -- participants can hedge their positions on another exchange during an outage.

The SEBI circular, which mandates interoperability of stock exchanges, is aimed at ensuring business continuity in case of an outage or technical glitch.

Securities and Exchange Board of India (Sebi) has allowed both the stock exchanges NSE, BSE to act as alternative trading venue at the time of outage on either exchange. Furthermore, this is part of the second phase of Business Continuity Planning (BCP) and Disaster Recovery Site (DRS) for Market Infrastructure Institutions (MIIs).

Following the recent technical glitch at the National Stock Exchange (NSE), which caused the longest-ever trading halt in Indian capital markets, SEBI has stressed on the need to create procedures for interoperability in the Indian stock exchanges.

The Securities and Exchange Board of India (SEBI) has introduced measures to enhance trading continuity during technical outages at stock exchanges. Under the new framework, the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) will serve as alternative trading venues for each other to minimise disruption and protect investor interests.