It’s been over two hours since India’s largest bourse stopped all trading in cash and derivative segments and it’s not clear yet when trading will restart.
Traders began facing issues with respect to rates on the NSE from 10:50 a.m. onwards. The National Stock Exchange of India Ltd. in a statement at 11:58 a.m. indicated “issues” with telecom links of its two service providers, which, it said, impacted the system and stopped prices from updating.
Yet, as per information collected by BloombergQuint, the NSE has not shifted to the ‘Near Site’ in Mumbai or to the ‘Disaster Recovery Site’ in Chennai. Both of these serve as backups incase of trading glitches in the primary exchange site. The NSE periodically undertakes live trading from these sites to ensure redundancy, as mandated by securities regulator SEBI.
The delay in shifting to backup sites could be because of some hardware issues, senior NSE officials told BloombergQuint on the condition of anonymity. The exchange spokesperson was not able to offer comment on the phone and has yet to respond to BloombergQuint’s email query. There has been no update from the exchange on when trading will restart.
“We have seen exchange outages at times across the world. NSE experiencing an outage is not unique. What is worrisome is the slow response in terms of communication and taking action. Quotes were frozen from 10.30 and it took till 11:40 to halt trading. In the digital age, contingency plans have to be robust and time sensitive,” investor Ajay Bagga told BloombergQuint. “Let’s wait for restoration and an analysis of what went wrong. Investors are worried about positions, margins and potential losses.”
Some brokers are calling for an extension of the trading session to make up for the lost hours, ahead of derivatives expiry tomorrow. A similar trading disruption took place in July 2017, when the NSE halted both the cash and derivatives segments due to technical issues. But when trading resumed that day, the session was not extended.
Technology glitches are normal and they can happen often, said Deven Choksey of KRChoksey Investment Managers Pvt to BloombergQuint. In order to overcome such kind of glitches, the exchanges should be asked to leverage each others’ infrastructure for continuity of trading, he added.
“It should be done on similar principles of business continuity planning on disaster recovery sites, wherein the other exchange steps in for the failed exchange so that continuity of market operation sustains. Considering there is expiry tomorrow, it is imperative to allow for extended hours today so that stakeholders can possibly take care of their obligations on the pre-expiry day today and expiry day tomorrow.”
Meanwhile, rival exchange BSE in a tweet said all its segments continue to operate normally.