The exchange had to shut down its whole system on Wednesday, resulting in confusion and chaos on Dalal Street. Market regulator Sebi was forced to extend the trading timings for the day to take care of traders’ open positions.
“While there was no impact to the trading system, this instability resulted in an impact to the online risk management system, which also is configured in a High Availability mode. Given that the online risk management system was unavailable, market functioning could not continue normally and hence had to be shut down,” a spokesperson for NSE said in a statement.
The largest exchange in India said it has multiple telecom links with two service providers to ensure redundancy and there were reports of instability of all their links from both the service providers.
NSE did not name the service providers.
The exchange said it was continuously working on the resolution of the problem, and once the same was resolved, NSE made an announcement with respect to re-opening of the markets.
Many dealers and traders blamed the exchange for lack of timely communication. They accused NSE of shutting the system without any notice. Moreover, NSE informed the media of reopening of trading only at 3:28 pm, and tweeted about the same well after trading resumed.
By the time NSE informed of the resolution of the issue and extended trade timing, most brokers had squared off open leveraged positions of their clients, which is a usual practice, meaning traders were left with no positions when the trading resumed and the market rallied sharply. This resulted in losses for many traders.
Sebi has asked for a detailed report on the glitch and also questioned why the backup system was not used during the crisis. It should be noted that the exchange had suffered a similar outage in 2017 as well.
“NSE is awaiting detailed root cause analysis from telecom service providers and vendors regarding this incident. NSE is in close contact with Sebi and keeping them updated of developments,” said the exchange.