A major software glitch disrupted trading at the National Stock Exchange, India’s largest stock exchange, on Monday with traders unable to execute the orders for over three hours, leaving the investors flustered at a time when the Sensex was showing signs of a big rally. Concerned over the disruption, the Securities and Exchange Board of India (SEBI) has directed the NSE to submit a detailed report on the snafu.
The regulator has also asked the NSE to have a review of its Business Continuity Plan (BCP) and submit a detailed plan as to what measures are going to be taken to avoid such recurrences. “Sebi is also looking at the matter comprehensively and will interact with different stakeholders to explore as to what more needs to be done to avoid such recurrences,” Sebi said after a review meeting with NSE officials.
Soon after the market opened for trading, traders realised by 9.15 am that either orders remained unmatched or were not executed. The problem then aggravated due to a high backlog and trading in the cash segment was halted by 9.30 a.m. After giving notice to the market, the F&O segment was also closed. “Two attempts to reopen the market were not successful. Finally, after over three hours, the market was pre-opened at 12.15 pm and opened at 12.30 pm for both cash and F&O segments. However, a market display problem was observed in the cash market and was rectified subsequently,” Sebi said.
The finance ministry also took note of the disruption and sought a report from Sebi on the technical glitch that led to trading disruptions. Market sources said it was not a healthy sign for the entire capital market when trading gets disrupted on the largest stock exchange for over three hours. Both the NSE and the BSE had encountered technical snags and disruptions several times in the past.
According to the Sebi, on preliminary analysis, the technical problem apparently is related to software. It does not seem to be related to any cyber security related compromise. “All the markets closed normally at the appointed time,” the regulator said.
Despite the hiccups, the Sensex rallied by 355 points and the NSE Nifty Index closed above 9700 for the first time during the day. The NSE “deeply apologised for the glitch”. The matter is being examined by the internal technical team and external vendors, to analyse and identify the cause which led to the issue and to suggest solutions to prevent recurrence, the exchange said in a statement.
According to the NSE, the cash market segment did not function normally due to technical problem at the opening on Monday and accordingly was closed. “F&O and CDS market segments opened normally. Subsequently after giving notice to the market, the F&O segment was also closed. Two attempts to reopen the market were not fully successful and finally at the third attempt the market was opened at 12.30 pm in the cash and F&O segments, after the pre-open period. The currency derivative segment was functioning normally,” NSE said.
“The matter has been referred to the Standing Committee on Technology, comprising of public interest directors and technology experts for review of the problem and to approve measures to prevent recurrence of such glitches,” NSE said.
On queries as to whether Monday’s technical glitch was related to a cyber-attack, the NSE said, “it is clarified that no such attack was observed leading to the technical glitch.” On why trading was not shifted to the alternate BCP site, the NSE clarified that BCP mechanism is normally invoked during any disaster, hardware failure, connectivity related issues. “Preliminary assessment indicated a software problem. Secondly, the system was expected to be rectified quickly and shifting BCP site would have taken longer time,” the NSE said.
“First half of the day was a complete chaos as trading was halted on the NSE due to a technical glitch. The trading activity resumed higher in line with its peer exchange (BSE) and as a result, the Nifty registered yet another all-time high way above the 9,750 mark on a closing basis as well,” Sameet Chavan, chief analyst-Technical and Derivatives, Angel Broking said.