SEBI Guidelines
According to SEBI guidelines on Internet trading, brokers providing e-trading must have a minimum net worth of Rs. 50 lakhs, besides obtaining specific permission of the stock exchange concerned. Stock exchanges should ensure that the systems used by the broker provide for security, reliability and confidentiality of data through use of the encryption technology. For signatures, participants should use authentication technologies and certification agencies as and when notified later.
Stock exchanges should also ensure that brokers maintain adequate back-up systems and data storage capacity. Brokers should have adequate system capacity for handling data transfer and arrange for alternate means of communication in case of Internet failure. The following security features are mandatory for all Internet-related trading systems:
*User ID.
*First level password.
*Automatic expiry of password at the end of reasonable duration.
*All transaction logs with proper audit facilities to be maintained in the system.
*Secured socket level security server for access through Internet.
*Suitable firewalls between trading set up directly connected to an exchange trading system and the internet trading set up.
SEBI has decided that Internet trading can take place in India within the existing legal framework through use of order routing systems, which will route orders from client to brokers, for trade execution on registered stock exchanges. SEBI has also recommended minimum technical standards for ensuring safety and security of transaction between clients and brokers which will be enforced by the respective stock-exchanges.
http://www.hinduonnet.com/businessline/iw/2000/08/27/stories/0727g051.htm
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