Advisory regarding Cyber Security Best Practices


SEBI/HO/ITD/ITD_VAPT/P/CIR/2023/032                                                                       February 22, 2023


All Stock Exchanges

All Clearing Corporations

All Depositories 

All Stock Brokers through Exchanges

All Depository Participants through Depositories  

All Mutual Funds / Asset Management Companies / Trustee Companies / Boards of Trustees of Mutual Funds / Association of Mutual Funds in India (AMFI) 

All Qualified Registrars to an Issue / Share Transfer Agents

Dear Sir / Madam,

Sub: Advisory for SEBI Regulated Entities (REs) regarding Cybersecurity best practices                                                  

  1. Financial sector organizations, stock exchanges, depositories, mutual funds and other financial entities have been experiencing cyber incidents which are rapidly growing in frequency and sophistication. Considering the interconnectedness and interdependency of the financial entities to carry out their functions, the cyber risk of any given entity is no longer limited to the entity’s owned or controlled systems, networks and assets
  2. Further, given the sophistication and persistence of the threat with a high level of coordination among threat actors, it is important to recognize that many traditional approaches to risk management and governance that worked in the past may not be comprehensive or agile enough to address the rapid changes in the threat environment and the pace of technological change that is redefining public and private enterprise.
  3. Thus, an efficient and effective response to and recovery from a cyber-incident by REs are essential to limit any related financial stability risks. For ensuring the same, Financial Computer Security Incident Response Team (CSIRT-Fin) has provided important recommendations in its report sent to SEBI. The applicable recommendations, in the form of an advisory, are enclosed at Annexure-A of this circular.
  4. This advisory should be read in conjunction with the applicable SEBI circulars (including but not limited to Cybersecurity and Cyber Resilience framework, Annual System Audit framework, etc.) and subsequent updates issued by SEBI from time to time.
  5. The compliance of the advisory shall be provided by the REs along with their cybersecurity audit report (conducted as per the applicable SEBI Cybersecurity and Cyber Resilience framework). The compliance shall be submitted as per the existing reporting mechanism and frequency of the respective cybersecurity audit.
  6. The advisory annexed with this circular shall be effective with immediate effect.
  7. This circular is issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.


 Yours Faithfully,


Shweta Banerjee

Deputy General Manager

Phone: 022-26449509 Email: [email protected]



In view of the increasing cybersecurity threat to the securities market, SEBI Regulated Entities (REs) are advised to implement the following practices as recommended by CSIRT-Fin:

1. Roles and Responsibilities of Chief Information Security Officer (CISO)/ Designated Officer:

REs are advised to define roles and responsibilities of Chief Information Security Officer (CISO) and other senior personnel. Reporting and compliance requirements shall be clearly specified in the security policy.


2. Measures against Phishing attacks/ websites:

i. The REs need to proactively monitor the cyberspace to identify phishing websites w.r.t. to REs domain and report the same to CSIRT-Fin/CERT-In for taking appropriate action.

ii. Majority of the infections are primarily introduced via phishing emails, malicious adverts on websites, and third-party apps and programs. Hence, thoughtfully designed security awareness campaigns that stress the avoidance of clicking on links and attachments in email, can establish an essential pillar of defense. Additionally, the advisories issued by CERT-In/ CSIRT-Fin may be referred for assistance in conducting exercises for public awareness.


3. Patch Management and Vulnerability Assessment and Penetration Testing (VAPT):

i. All operating systems and applications should be updated with the latest patches on a regular basis. As an interim measure for zero-day vulnerabilities and where patches are not available, virtual patching can be considered for protecting systems and networks. This measure hinders cybercriminals from gaining access to any system through vulnerabilities in end-of-support and end-of-life applications and software. Patches should be sourced only from the authorized sites of the OEM.

ii. Security audit / Vulnerability Assessment and Penetration Testing (VAPT) of the application should be conducted at regular basis and in accordance with the Cyber Security and Cyber Resilience circulars of SEBI issued from time to time.

The observation/ gaps of VAPT/Security Audit should be resolved as per the timelines prescribed by SEBI.


4. Measures for Data Protection and Data breach:

i. REs are advised to prepare detailed incident response plan.

ii. Enforce effective data protection, backup, and recovery measures.

iii. Encryption of the data at rest should be implemented to prevent the attacker from accessing the unencrypted data.

iv. Identify and classify sensitive and Personally Identifiable Information (PII) data and apply measures for encrypting such data in transit and at rest.

v. Deploy data leakage prevention (DLP) solutions / processes.


5. Log retention:

Strong log retention policy should be implemented as per extant SEBI regulations and required by CERT-In and IT Act 2000. REs are advised to audit that all logs are being collected. Monitoring of all logs of events and incidents to identify unusual patterns and behaviours should be done.


6. Password Policy/ Authentication Mechanisms:

i. Strong password policy should be implemented. The policy should include a clause of periodic review of accounts of ex-employees Passwords should not be reused across multiple accounts or list of passwords should not be stored on the system.

ii. Enable multi factor authentication (MFA) for all users that connect using online/internet facility and also particularly for virtual private networks, webmail and accounts that access critical systems.

iii. Maker and Checker framework should be implemented in strict manner and MFA should be enabled for all user accounts, especially for user accounts accessing critical applications.


7. Privilege Management:

i. Maker-Checker framework should be implemented for modifying the user’s right in internal applications.

ii. For mitigating the insider threat problem, ‘least privilege’ approach to provide security for both on-and off-premises resources (i.e., zero-trust models) should be implemented. Zero Trust is rooted in the principle of “trust nothing, verify everything.” This security model requires strict identity verification for each and every resource and device attempting to get access to any information on a private network, regardless of where they are situated, within or outside of a network perimeter.


8. Cybersecurity Controls:

i. Deploy web and email filters on the network. Configure these devices to scan for known bad domains, sources, and addresses, block these before receiving and downloading messages. Scan all emails, attachments, and downloads both on the host and at the mail gateway with a reputable antivirus solution.

ii. Block the malicious domains/IPs after diligently verifying them without impacting the operations. CSIRT-Fin/CERT-In advisories which are published periodically should be referred for latest malicious domains/IPs, C&C DNS and links.

iii. Restrict execution of “powershell” and “wscript” in enterprise environment, if not required. Ensure installation and use of the latest version of PowerShell, with enhanced logging enabled, script block logging and transcription enabled. Send the associated logs to a centralized log repository for monitoring and analysis.

iv. Utilize host based firewall to prevent Remote Procedure Call (RPC) and Server Message Block (SMB) communication among endpoints whenever possible.

This limits lateral movement as well as other attack activities.


v. Practice of whitelisting of ports based on business usage at Firewall level should be implemented rather than blacklisting of certain ports. Traffic on all other ports which have not been whitelisted should be blocked by default.


9. Security of Cloud Services:

i. Check public accessibility of all cloud instances in use. Make sure that no server/bucket is inadvertently leaking data due to inappropriate configurations.

ii. Ensure proper security of cloud access tokens. The tokens should not be exposed publicly in website source code, any configuration files etc.

iii. Implement appropriate security measures for testing, staging and backup environments hosted on cloud. Ensure that production environment is kept properly segregated from these. Disable/remove older or testing environments if their usage is no longer required.

iv. Consider employing hybrid data security tools that focus on operating in a shared responsibility model for cloud-based environments.


10. Implementation of CERT-In/ CSIRT-Fin Advisories:

The advisories issued by CERT-In should be implemented in letter and spirit by the regulated entities. Additionally, the advisories should be implemented promptly as and when received.


11. Concentration Risk on Outsourced Agencies:

i. It has been observed that single third party vendors are providing services to multiple REs, which creates concentration risk. Here, such third parties though being small non-financial organizations, if any cyber-attack, happens at such organizations, the same could have systemic implication due to high concentration risk.

ii. Thus, there is a need for identification of such organizations and prescribing specific cyber security controls, including audit of their systems and protocols from independent auditors, to mitigate such concentration risk.

iii. Further, REs also need to take into account this concentration risk while outsourcing multiple critical services to the same vendor.


12. Audit and ISO Certification:

i. SEBI’s instructions on external audit of REs by independent auditors empaneled by CERT-In should be complied with in letter and spirit.

ii. The REs are also advised to go for ISO certification as the same provides a reasonable assurance on the preparedness of the RE with respect to cybersecurity.

iii. Due diligence with respect to audit process and tools used for such audit needs to be undertaken to ensure competence and effectiveness of audits.