This is the third major problem on the NSE in the past five years and came just a day before the February M&O contracts expired as revenue increased. Sebi also asked the NSE to do a root cause analysis of the problem and submit a report.
Wednesday’s tech glitch, one of the longest in NSE history, came even as the regulator was working on a plan to put in place a mechanism to compensate investors for the losses they suffer due to these failures. On the ESB, uninterrupted trading continued until 5 p.m.
Brokers said that at 10:06 a.m. they stopped receiving data feeds from the NSE for the Nifty, Bank Clever and other clues. From around 11:15 am, the data feed for NSE’s F&O segments also faced a problem and finally at 11:40 am the exchange halted trading in all segments.
As brokers, especially speculators and the day tradersPanicked because they could not compete with the positions they had taken earlier in the session, NSE officials got the negotiating mechanism back on track. Sebi and NSE officials were also engaged in heated talks throughout the day. Finally at 3:17 p.m., NSE announced the resumption of trading with an extended day session until 5:00 p.m.
Shortly after stopping trading on the NSE, the exchange said two telecommunications providers it works with had failed to connect with brokers. Market participants, however, pointed out that if this was an issue with telecom service providers, it was unlikely that if the cash segment’s data flow would be interrupted around 10 a.m. that of the F&O segment continues for one hour. They also pointed out that NSE’s disaster recovery mechanism did not work on Wednesday when it needed it most.
Since the tech glitch took place a day before derivative contracts expired for the current month, panic had set in among traders and speculators. Usually, as the expiration day approaches, trading volumes increase and traders, speculators and hedgers try to rearrange their strategies.
With NSE trading suspended for most of Wednesday, a large number of day traders were stuck with their buy or short positions in the spot and F&O segments of the exchange, which were executed on start of the session.
Around 3 p.m., several brokers helped their clients reconcile their speculative positions in the cash segment of the NSE with counter-transactions in the cash segment of the BSE. However, since the trading volumes in the F&O segment of BSE are almost negligible, similar positions taken on ESN could not be corrected as they did for cash positions.
Fortunately, after the NSE announced the reopening of trading from 3:45 p.m., day traders were relieved, market participants and social media posts said.
Last week, in his annual report, Sebi said he was working to put in place a mechanism to compensate investors for losses suffered as a result of these technological issues. Incidentally, as the NSE glitch continued, a report of the Tokyo Stock Exchange chief’s resignation due to a one-day tech glitch in November 2020 circulated on social media.