F&O shutdown: Sebi to seek NSE explanation

Asked about the NSE’s decision to shut trading in F&O segment on Friday due to a technical snag, Sebi chairman G. N. Bajpai said “the regulator will seek explanation why it happened. We will ask the exchange to ensure that this does not happen again.”

Following technical problems in the F&O segment, the bourse had closed trading between 3.00-3.30 PM and extended the trading hours upto 4.45 PM to compensate for lost time. NSE MD Ravi Narain said the problem was specific to derivatives segment and cash market continued to work normally. The shutdown of the derivative segment created panic in the market on Friday. “This happened when the market was falling. The closure added to the confusion and more selling followed. “I suspect something fishy in the closure of the F&O segment when the market was crashing,” said Pawan Dharnidharka, a Mumbai dealer.

Bajpai said the enforcement function, where the systems were perceived to be not upto the mark, was closely linked with compliance and better performance on this count would help to regulate market. The people associated with the compliance work should be thorough with rules and purpose of regulations to ensure effective functioning, he said. Besides, this knowledge and skills, officials should maintain financial and intellectual integrity to facilitate compliance, Bajpai said on the sidelines of a seminar on compliance organised by the Association of NSE Members of India (ANMI).