Mumbai: India’s largest exchange was closed for nearly four hours on Wednesday because it said it was a telecommunications network failure, and its operators’ lack of transparency on the issue caused opposition from traders, which they said caused “absolute destruction”. .
The National Stock Exchange opened as usual at around 9:15 am local time, but traders said that after about an hour, its main index prices stopped updating.
At 11:40 in the morning, the NSE was completely closed for trading, making traders wonder what would happen to the open positions.
The event happened just before the monthly expiration of derivatives on the last Thursday of each month, when traders closed or extended open positions.
“This was an unmitigated disaster because you need to communicate this proactively. Not one person in the market knew they would shut down the exchange,” Varun Khandelwal, director at Bullero Capital, a New Delhi-based proprietary trading firm.
The first public news of the 11:40 a.m. shutdown came via social media and to the broader media around 20 minutes later.
The NSE said it had multiple telecom links with two service providers but had problems with both of them.
“People believed things would come back up in half an hour or an hour. But this complete lack of transparency from NSE created absolute havoc,” said Jimeet Modi, founder of brokerage Samco Securities.
NSE did not respond to a request for comment.
Trading resumed after nearly four hours, and the exchange extended the trading hours to late night.
The NSE Nifty 50 index finally closed up 1.9%, because financial stocks rose after the Ministry of Finance announced that private sector lenders could conduct government transactions such as taxes and pension payments.
Market participants questioned why NSE did not have a backup plan, especially after a similar five-hour downtime in 2017.
The market regulator in India in the evening asked NSE to conduct a “detailed root cause analysis” and explain why the transaction was not migrated to the disaster recovery site.
Anup Khandelwal, chairman of the National Association of Exchange Members of India, told Reuters that investors and brokers have suffered losses because many people have begun to shut down another stock exchange that competes with the NSE at a lower price. BSE Ltd.’s open positions.
Zerodha, the country’s top brokerage firm which says it contributes to more than 15% of all Indian retail trading volume, sent multiple mobile-app alerts to its users and said it was in talks with the NSE.
On Twitter, #zerodha became a top trending hashtag as worried users asked questions about their portfolios.
“The sad state of today’s glitch is that no one ‘will’ take any responsibility of traders’ losses whatsoever. Not any broker and not even @NSE,” said Twitter user Rushikesh T.