Indian Stock Market Stopped Due To Massive Tech Glitch – Free PDF Download

What happened?

• The National Stock Exchange (NSE) was hit by technical snag during the trading session on Wednesday.
• According to stock brokers and dealers, the problem started with rates of Bank Nifty index were not updating and later spread to the Nifty index as well.
• They pointed out that the issue with Bank Nifty feeds started between 10 AM and 10.20 AM.
• Around 11.40 AM, the NSE said it was suspending trading across futures and options segment.

• In the next few minutes, the NSE said it was suspending trading for the day until further notice.
• NSE shut trading for entire markets till further notice.
• Both Nifty and Bank Nifty are the largest traded derivative contracts of the NSE and the glitch caused market disruption just a day ahead of the February month futures and options expiry.

What was the problem?

• NSE in a tweet said it had received communication from the telecom service providers that there are issues with their links due to which there was an impact on the NSE system.

But is there not any backup?

• After the issue, the NSE did not shift 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.
• But the larger question here is, National Stock Exchange which is the world’s largest exchange is facing again a technology issue.

• A similar trading disruption took place in July 2017, when the NSE halted (3 hrs.) both the cash and derivatives segments due to technical issues.
• But when trading resumed that day, the session was not extended.
• NSE Clearing, the trade clearing and settlement arm of the NSE, was hit by a ‘technical glitch’ on December 21 that affected several stock brokers.
• Although tech glitch has been a recurring phenomena for NSE for the past few years, SEBI has not made public any of its analysis of it.
• Last year, brokers association ANMI had even shot-off a letter to NSE alleging severe loss to its members due to tech glitch.

Losers & gainers

• Option writers benefit the most if markets are shut for trading as those who have bought or sold options loose out on time value

Conclusion

• 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 & it took till 11:40 to halt trading.
• In the digital age, contingency plans have to be robust and time sensitive.

Q) Which of the following statements regarding National Stock Exchange and Bombay Stock Exchange is correct?

1. NSE was established before BSE.
2. Market capitalisation of NSE is more than that of BSE.

1. 1 only
2. 2 only
3. Both 1 & 2
4. None of the above

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