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 (Photo: Abhijit Bhatlekar/Mint)
(Photo: Abhijit Bhatlekar/Mint)

NSE to implement interoperability in phased manner

  • NSE's clearing corporation software was not ready for a smooth transition
  • BSE, ICCL had consent of 15 members to implement on 3 June

Mumbai: While BSE Ltd’s clearing corporation ICCL and Metrpolitan Stock Exchange’s clearing (MSE) corporation on first day of implementation of interoperability had success in clearing orders of BSE and MSE, trades from NSE on other clearing corporation did not happen.

As per people familiar with the developments NSE, its clearing corporation software was not ready for a smooth transition and for trades to flow smoothly through all clearing corporations.

Hassled members who were ready to make use of interoperability wrote to the National Stock Exchange (NSE) that it’s trades were not reflecting in the clearing corporation of their choice.

One member who spoke to Mint said that he faced hassles as NSE trades were not reflecting at ICCL and ICCL’s systems were not connecting with NSE platform.

This member wrote to NSE that he was worried about live trading.

“As per NSE circular, members who have selected ICCL as a clearing corporation will not be able to view NSE trades on NSE software which connects all clearing corporations. But in that case NSE data should be available to all members till NSE is ready for interoperability," said the member.

Interoperatbility is a mechanism by which one clearing corporation could be used to execute and settle trades of any exchange. Sebi on 27 November 2018 had given exchanges and clearing corporations deadline to implement it from 1 June. However, the exchanges through a joint press release on 28 May extended the implementation to 3 July as the trading member’s back offices were not ready.

BSE, ICCL however had consent of 15 members to implement on 3 June.

“15 clearing members at ICCL opted for Interoperability to be effective from June 3, 2019 and for such members, ICCL cleared trades for such members executed on exchanges that were connected to the Interoperability framework," said BSE in a press statement.

Similarly, first trades of MSE’s Equity cash segment were settled through BSE’s ICCL.

“On Saturday all clearing corporations and exchanges conducted mock trading session. It was then NSE realized that NSE systems were not connected seamlessly with back end of other clearing corporations. NSE commands a near complete market share and most of the institutional players also trade through NSE systems in this context NSE could not give an imperfect system just for a first advantage," said a person with direct knowledge of the matter.

NSE has almost 100% market share in futures and options and 95% cash trades also happen on NSE.

“NSE will however implement it in the coming couple of days and would be done in a phased manner. Perhaps starting with cash segment. NSE has a deadline of 3 July the exchange wants to implement it before that," said a second person familiar with the developments.

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