NSE Suffers Technical Glitch!!

24 February 2021

The time is 10:00 AM and traders have been trading as usual without a hint of what's in the offing! Out of the blue the tickers of Nifty and other National Stock Exchange Indices just STOP updating! Futures & Options quotes seemed frozen! The National Stock Exchange (NSE) finally is made aware and quickly swings into action.

On its Twitter handle @NSEIndia, it finally released an update at 12 PM IST and notified the traders who are transacting on NSE particularly that they are facing Technical issues with their Telecom links with two Service Providers. They also put on record that they have received communication with both of them confirming the same. And this is the reason why NSE Servers had an impact. NSE did not name the two Telecom Service Providers in question.

Normal trading was halted at 11:40 AM as NSE did whatever it could to restore normalcy. However, it took almost entirety of a trading day for the NSE to come out with some sort of extension as they announced at 3 PM IST that Market will have a Pre-Open at 3:30 PM IST and the Pre-Open session will last whole 8 minutes to close at 3:38 PM IST. Normal Market was extended from 3:45 PM for transaction of trades and Market Close was announced at 5:00 PM.

All this while the BSE was not impacted and trades went on as usual. In fact it saw a big rise in volumes traded as the total equity soared 9 times as compared to last week and the figure stood at 40, 698 Crore!! As a result of which the 30 share BSE Index gained 1,030 points to close at 50,782 (+ 2.07%).

A lot of traders suffered big losses as the NSE suffered a technical glitch. Especially Day Traders were seen as suffering the most. The February F&O series expiry was just a day after and this couldn't have come at a worse stage. A lot the traders were left wondering why was the entire NSE shut when only the Index Feeds were not updating! In fact Jimeet Modi, CEO & Founder of Samco Ventures wondered " Feeds for contracts and order matching was okay, then why shut down the entire market?" There is also a sentiment rising in the market that NSE did not warn traders before time even as reports started coming in from dealers that at 10 AM they began noticing that the tickers of Nifty, Bank Nifty and other NSE Indices were not refreshing. NSE abruptly stopped all trading at 11:40 AM without any prior warning!

Zerodha released a statement stating that "While there was nothing we could do about the intraday F&O positions on NSE, at around 2.30 PM, we sent a message to all our customers that we will exit the intraday equity NSE positions on BSE. This was important (and in the clients’ best interest) because these positions could have led to leveraged positions, short delivery and huge auction penalties if held overnight. Around 3:17 PM, after we had squared off all intraday equity positions along with most other brokers, NSE abruptly informed all brokers that they would open for trading at 3:30 PM (pre-open), and there would be an extended trading session from 3:45 PM to 5 PM. While the extended trading session thankfully helped a lot of the F&O customers exit their positions, it created quite a bit of confusion among customers whose positions had been squared off".

Offering some sort of solace to those whose positions were automatically squared off by Zerodha they waived off the square-off charges of Rs. 50/- for all the intraday and F&O trades today.

On the other hand ICICI Direct said in a Tweet "If NSE doesn’t start anytime before 3 pm, for all intraday positions in Margin broker mode and Margin Plus, reverse position in BSE will be taken to square off your positions starting 3 pm today."

As reports start pouring in from other popular brokerage firms like ICICI Direct etc, the extent of the losses suffered especially by Day Traders due to such an unforeseen instance is hard to measure.

This was not the first time NSE faced this sort of a problem. It suffered a similar technical glitch in 2017 which saw the market closed for trading for a total of 5 hours!!

The extraordinary day closed at 5 PM today as NIFTY closed at 14,982 (+1.86%) gaining 274 points over the previous days close.

Even as the SEBI has ordered an inquiry on this issue the worrying question to ask is "Will this happen again?"