The National Stock Exchange (NSE) on Wednesday halted trading for nearly four hours because of technical glitches. The NSE said trading resumed at 3.45 pm after activity came to a halt at 11.40 am. Both the NSE and BSE extended trading hours for the equity and derivatives markets till 5 pm.
“NSE has multiple telecom links with two service providers to ensure redundancy and we have received communication from both the telecom service providers that there are issues with their links due to which there is an impact on NSE system,” a statement from an NSE spokesperson said.
Though the NSE stopped functioning at 11.40 am, the BSE remained functional throughout the day, allowing trades to be concluded in the cash segment. Trading resumed at 3:45 pm on the NSE to allow settlement and closure of trades in the derivative segment. The BSE followed suit and extended trading in the equity and derivatives segments till 5 pm.
The effect of the temporary discontinuation of trade on the NSE was felt the most in the equity derivatives segment since most intra-day trade positions in the cash market from the NSE were diverted to the BSE’s cash market.
Ashish Rathi, whole time director, HDFC Securities, said, “While BSE cash is open, liquidity is observed more in NSE. Customers who wanted to trade in the cash segment can do it in the BSE segment. However, equity derivatives segment customers had been impacted for their trading activity.”
While the trades in the cash segment were directed to BSE from NSE, thanks to interoperability between the exchanges, derivative trades could be concluded only when markets resumed trading again late afternoon.
Market experts said a solution to abate such instances would be extension of the interoperability clause. Deven Choksey, managing director, KRChoksey Investment Managers, said: “Interoperability clause should be extended and it should provide for using the trading infrastructure of another exchange to prevent repeat of such situations in future.”
Given the unprecedented nature of the situation, Sebi has advised the NSE to carry out a detailed root cause analysis of the “trading halt” and also explain the reasons why trading did not migrate to the disaster recovery site. “Sebi has asked NSE to submit its report at the earliest. It was informed by the NSE that trading was halted at 11.40 am today due to issues with the links with telecom service providers,” a Sebi statement said.
Options traders were adversely impacted as many could have lost out on their trade value and time value. Another impact of Wednesday’s technical snag was felt on the volumes of the bourses. The cash turnover on the NSE stood at Rs 45,837.2 crore, against the six-month average of Rs 64,795.95 crore. Futures and options volumes almost equalled with the six-month average of Rs 30.7 lakh crore. Wednesday’s F&O turnover was Rs 30.6 lakh crore.
Prakarsh Gagdani, CEO, 5Paisa Brokerage, said: “We directed the intraday trades in the cash segment to BSE. The equity derivative trades which were on hold earlier would take place between 3.45 pm and 5 pm. The impact for us was mainly on volumes and for options traders since it will affect their trade value and time value.”