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

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

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

In a bid to provide continuity of trading for investors, market regulator SEBI has asked the National Stock Exchange and Bombay Stock Exchange to act as a backup to each other, in the event of an outage.

Indian market regulator today gave its go ahead to NSE and BSE to act as alternative trading venue at the time of outage on either exchange. The exchanges will now have to prepare an SOP (Standard Operating Procedure) that should include a plan to be invoked at the time of outage and submit it within 60 days.

SEBI has directed BSE and NSE to act as alternative trading venues during outages, ensuring uninterrupted trading for investors. Exchanges must submit a joint SOP to SEBI within 60 days.