NSE hit by trading glitch, exchange says not a cyberattack
Mumbai: Trading at India’s largest stock exchange by volumes, National Stock Exchange of India Ltd (NSE) on Monday was forced to stop for around three hours at the start owing to technical issues.
Trading eventually resumed at 12:30 pm and the bourse’s technology committee and the Securities and Exchange Board of India are examining the issue. NSE also clarified that the glitch was not the result of a cyberattack attempt.
“NSE cash market segment did not function normally due to a technical problem at the opening today and accordingly was closed,” said NSE in a statement. It didn’t go into details of the technical glitch which affected the cash segment.
The issue started in early hours. The benchmark Nifty and Sensex indices hit a fresh record high in opening trade on Monday, but soon after opening, NSE quotes were seen not moving in sync with BSE prices and trades were not going through, said traders.
“A display issue of market prices was noticed. NSE is working to address the issue,” said an exchange official at that time.
The derivatives segment was working normally and for sometime the futures and options segment continued trading even when the underlying market was halted. However to ensure price parity, the equity and equity derivatives segment, including currency derivatives trading was stopped.
The bourse shut both the cash and derivatives segments at 9:55 am and said pre-market trading would resume at 10:45 am. Technical issues persisted, forcing it to delay the restart to 11 am before it finally reopened at 12:30 pm. Members trading in derivatives segment were given a window to cancel outstanding orders, from 12:15pm to 12:29pm.
While work was going on to restore normal trading earlier, brokers questioned why trading was not started from the disaster recovery site at Chennai and the unusual time taken by NSE to have a cohesive response.
The disaster recovery site is a replica of the primary site which ensures all exchange data is replicated on a real time basis, which should start if the trading is disrupted on the main segment.
“These are huge systems and things can go wrong, however my biggest worry is why the trading was not resumed from disaster recovery site. Lakhs of traders are queued in and there is uncertainty,” said Deena Mehta, managing director at Asit C. Mehta Investment Intermediates Ltd, and a former director of rival exchange BSE.
NSE said that disaster recovery(DR) site is used in instances of disaster and this was a software issue.
That “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 (business continuity plan or disaster recovery) site would have taken longer time,” said a NSE statement.
The exchange said it has referred the matter to its Standing Committee on Technology, comprising of public interest directors and technology experts for reviewing the problem and approving measures to prevent recurrence of such glitches.
“The issue 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 NSE statement added.
Market participants said the exchange could have communicated better.
“The exchange could have communicated it in a better way which would have helped investor community,” Dipan Mehta, Member, BSE & NSE.
Sebi has sought a detailed report from the exchange on what lead to the technical snag, said the regulator. These reports would also be sent to finance ministry.
“Sebi has also asked NSE to have a review of their Business Continuity Plans and to submit a detailed plan as to what measures are going to be taken to avoid such recurrences,” the regulator said in an emailed statement. “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.”
The Nifty resumed trading at 9,727.65 points. Most sectoral indices traded with gains with Public Sector Banks (PSBs), IT and pharmaceutical stocks leading the way. The day ended with the Nifty trading 1.09% higher from the previous day closing at 9771.05.