As a regulatory body for the Indian capital market SEBI has initiated steps to co-ordinate and synchronize the efforts made by the various agencies operating in the capital market to combat the Y2K problem in order to ensure a smooth and unhampered transition in the next millennium.. A time bound schedule for implementation of a comprehensive plan to combat the Y2K problem has been drawn up by SEBI and has been circulated to all the intermediaries functioning in the capital market either directly or through SROs.

The intermediaries had been advised to reach Y2K compliant position by November 30, 1999. A task force has been set up to monitor the progress periodically and to co-ordinate the efforts to find a solution to this problem. 

Additional stress has been laid upon the contingency measures in view of potential failures of key parts of financial market infrastructure. The testing and validity of the contingency plans is being emphasized to counter any failure.

SEBI has apprised the Ministry of Finance, Planning Commission regarding the preparedness level of Capital Markets. SEBI is already in touch with the Reserve Bank of India, Indian Banks Association, Insurance Regulatory Authority, Department of Electronics and Department of Telecommunications for co-ordinating and synchronising the efforts.

In order to mitigate global concerns over capital market’s preparedness on the Year 2000 problem, SEBI is also in touch with the Joint Year 2000 Council and IOSCO. The measures taken by SEBI in this regard have been appreciated by IOSCO and Chairman Shri D.R. Mehta was designated as the representative of IOSCO to the Joint Year 2000 Council.

It is obvious that no individual IT user, individual institution, sector, market, or country is immune to the difficult issues presented by the Year 2000 problem. Even if an institution has verified and tested all its internally developed systems and applications, it will be affected by: the state of readiness of its vendors and third party service providers; the public utilities upon which it relies; the infrastructure that it relies upon its trading, payment and external information needs. Moreover, the globalisation of financial and economic activity and the widespread use of information and telecommunications technology throughout the world have created various international interconnections and global interdependencies, which greatly add to the complexity of the challenge.

MEASURES TAKEN BY SEBI

The following measures have been taken by SEBI to ensure Y2K compliancy in the capital market and also to keep the investors well informed on the Y2K status:

1. It would be made mandatory for the listed companies to give a brief status on their Y2K preparedness level in their published quarterly results. 
2. Every intermediary registered with SEBI would be under an obligation to discuss the issue at the Board meeting and should keep the higher management well informed regarding the preparatory status for ensuring Y2K compliance.
3. SEBI nominees on the board of Stock Exchanges would discuss the status of the Y2K preparedness of the Stock exchanges, clearinghouses/clearing corporations, and the brokers operating on the stock exchanges at the Board meetings. They would keep the Chairman informed about these deliberations on a regular basis.
4. It would be compulsory for all the companies, approaching the capital market in 1999 to declare their Y2K preparedness status in their prospectus.
5. It shall be mandatory for all intermediaries registered with SEBI to keep hard copies of all the current records pertaining to their own and their client's operations as on December 30th, 1999
6. In their quarterly results the companies have been asked to disclose the following:

1. the risk of the company’s Year 2000 issues
2. the cost to address the company’s Year 2000 issues
3. the company’s contingency plans.

1. Instructions have also been issued to all the Stock Exchanges for drawing out necessary contingency plans in case of system disruption due to Year 2000 problem. Stock Exchanges have been asked to deactivate the terminals of non-compliant brokers with effect from trading cycle commencing on/after December 15, 1999.
2. Plantation Schemes, Venture Capital Funds, and Credit Rating Agencies. have also been asked to submit their Y2K compliance status to SEBI. 
3. Registrars and Share Transfer Agents have been informed that in the case of non-compliance by November 30, 1999 their clients would be informed of their non-compliance status and asked to change the agency.
4. The Exchanges had been asked to prepare a detailed contingency plans for themselves and the member brokers and forward it to SEBI . 
5. December 30, 1999 shall be the last trading day of the last trading cycle in the calendar year 1999 for all stock exchanges. This would imply that all outstanding positions at the close of business on December 30, 1999, in all Stock Exchanges which do not have carry forward trading facilities, shall result in delivery. In the Exchanges which have carry forward facilities outstanding positions as determined at the end of business on December 30, 1999 may be carried forward to the next settlement which would be the first settlement in January 2000;
6. All Exchanges shall conduct mock trading sessions on January 1 and January 2, 2000 to test all the systems including connectivity with depositories and submit a report to SEBI latest by 4.00 p.m. on both the days. The report shall include the nature of software problems if any, and corrective action taken ; 
7. The exchanges shall also submit daily reports to SEBI on actual trading indicating software problems if any, at the end of each day for the first trading cycle commencing in the year 2000.