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Didn’t shift to disaster recovery site after evaluation: NSE on glitch

On Thursday, the NSE had said it had to shut down temporarily on Wednesday due to telecom link failure leading to unavailability of online risk managementPremium
On Thursday, the NSE had said it had to shut down temporarily on Wednesday due to telecom link failure leading to unavailability of online risk management

  • The exchange has been condemned by brokers on why trading could not be switched over to NSE’s backup site
  • NSE said that it has a strong technology governance process in place wherein the technology infrastructure is reviewed on a regular basis by committees

Following the glitch that prompted for a nearly four hour trading halt, National Stock Exchange (NSE) has said on Friday that the decision to stick to primary site over disaster recovery site was taken after detailed evaluation. The exchange has been condemned by brokers on why trading could not be switched over to NSE’s backup site. The backup site is a replica of the primary site and is aimed at ensuring trading activity does not stop even if there is a technical glitch.

Further clarifying about that the technical snag which resulted in monetary losses of traders and investors, NSE said that it has a strong technology governance process in place wherein the technology infrastructure is reviewed on a regular basis by committees. Technology infrastructure support to NSE is provided by vendors like Cisco, HP, Dell, Hitachi, Checkpoint, Palo Alto, Oracle etc. and aided by technology service providers like TCS, Cognizant, Wipro. NSE said in a press statement.

“NSE invests heavily in its technology infrastructure on a continuous basis and over the last three to four years, NSE has almost tripled its annual cash spend on capital and operational expenses on technology to approximately 900 crore with a strong technology workforce of approximately 1500 plus people (employees and vendor staff)," the statement said.

It also added that NSE constantly endeavours to provide a glitch free environment. However, the complex technology architecture has significant external and vendor dependencies in terms of connectivity and hardware.

According to NSE annual report, during FY 2019-20, its total IT and telecom expenses were 222.30 crore as compared to 204.31 crore for FY 2018-19. As of March 2020, NSE’s pan-India high speed network is supported by around 194,255 terminals.

On Thursday, the NSE had said it had to shut down temporarily on Wednesday due to telecom link failure leading to unavailability of online risk management.

The Securities and Exchange Board of India (Sebi) has advised NSE to carry out a detailed analysis of the circumstances that caused the snag and also asked to explain the reasons for trading not migrating to the disaster recovery site.

Brokers' body Association of National Exchanges Members of India (Anmi) has requested the Securities and Exchange Board of India to maintain status quo on the peak margin rules as there had been no reported instances of defaults under the current system.

"Going to 50% from the current 25% would affect the business of the members and their clients especially when the current norms seem to have been sufficient enough to manage the risks arising out of intraday trades and volatility," said Anmi. Anmi has also requested for a virtual meeting with the market regulator to discuss the matter.

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