MUMBAI: The National Stock Exchange (NSE), India’s largest bourse, suffered an over five-hour tech glitch from about 10am on Wednesday. The incident prompted the markets regulator Sebi to step in and extend trading hours by an hour and half till 5pm.
This is the third major glitch on the NSE in the last five years and came just a day before the expiry of the February F&O contracts as turnover surged. Sebi also asked the NSE to carry out a root-cause analysis of the glitch and submit a report.
Wednesday’s tech glitch, one of the longest ever on the NSE, happened even as the regulator was working on a plan to put in place a mechanism to compensate investors for the losses they incur due to such outages. On the BSE, uninterrupted trading continued till 5pm.
Brokers said that at 10.06am, they stopped receiving data feed from the NSE for the Nifty, Bank Nifty and other indices. From around 11.15am, data feed for NSE’s F&O segments also faced a glitch and, finally at 11.40am, the exchange halted trading in all the segments.
As brokers, especially speculators and day traders, panicked since they could not square off the positions they had taken earlier in the session, NSE officials put the trading mechanism back on track. Sebi and NSE officials were also engaged in hectic parleys through the day. Finally at 3.17pm, NSE announced the resumption of trading with the day’s session extended till 5pm.
Soon after trading was stopped on the NSE, the bourse said that two telecom providers it engages with failed to connect with brokers. Market players, however, pointed out that if it was a problem with telecom service providers, it was unlikely that while data feed from the cash segment was disrupted at about 10am, that for the F&O segment continued for the next one hour. They also pointed out that NSE’s disaster recovery mechanism failed to kick in on Wednesday when it was needed the most.
Since the tech glitch took place a day before the expiry of derivatives contracts for the current month, panic had set in among traders and speculators. Usually as expiry day nears, trading volumes pick up and traders, speculators and hedgers try to re-organise their strategies.
With trading on the NSE suspended for most of Wednesday, a large number of day-traders were stuck with their buy or short-sell positions in the cash and F&O segments of the bourse, which were executed early in the session.
About 3pm, several brokers helped their clients to square off their speculative positions in the cash segment of the NSE with counter trades in BSE’s cash segment. However, since trading volumes in BSE’s F&O segment is nearly negligible, similar positions taken on the NSE could not be squared off like they did for cash positions.
Thankfully, after the NSE announced re-opening of trading from 3.45pm, day traders were relieved, market players and social media posts indicated.
Last week in its annual report, Sebi said it was working to put in place a compensation mechanism for investors for losses incurred due to such tech glitches. Incidentally, as the glitch on the NSE continued, a report about the resignation of the chief of Tokyo Stock Exchange due to a day-long tech glitch in November 2020 did the rounds on social media.