A day after the National Stock Exchange halted trading on its platform for around four hours causing mayhem among investors and brokers, the Securities and Exchange Board of India on Thursday said that it will take all the required steps to ensure rectification of the causes of the incident, and also address institutional deficiencies, if needed.
The capital markets regulator has already advised the NSE to expeditiously carry out a detailed root cause analysis of the trading halt and also to explain the reasons for trading not migrating to the disaster recovery site, as per the prescribed norms.
"SEBI would take all necessary measures to ensure rectification of the underlying causes including addressing institutional deficiencies," the regulator said in a statement.
It noted that despite the trading halt, the framework of interoperability put in place by the SEBI facilitated market participants to continue their transactions at other stock exchanges, thereby allowing them to seamlessly trade or square off their existing positions.
"The same is evident from the fact that the trading turnover at BSE in equity segment jumped to Rs 40,600 crore on February 24, 2021 as compared to an average daily trading turnover of approximately Rs 5,200 crore during the previous 30 days," it said.
Over and above the market design of interoperability, which facilitates a market participant to trade on multiple trading platforms, the decision to extend the market timings also enabled investors to square off their existing positions, according to the SEBI.
The statement said that the SEBI has put in place a comprehensive framework to deal with incidences of technical glitches at Market Infrastructure Institutions (MIIs).
It also mentioned that trading outages are an area of concern in other important jurisdictions as well. Exchanges in the UK, Japan, Australia and New Zealand have suffered trading outages in the recent past.
According to Livemint, the Bombay Stock Exchange also came down heavily on the NSE for how the glitch was handled. “It was anti-competitive and unethical on the part of NSE Clearing Ltd (NCL) to stop its operations to preserve NSE’s monopoly and hold the market to ransom,” it reportedly said. Investors could allegedly not shift to BSE’s platform, as allowed by SEBI.
“The troubles at NCL prevented the market from shifting to BSE’s trading platform. The NSE-owned clearing corporation stopped functioning and ensured all brokers who clear through them couldn’t place orders on BSE," a BSE spokesperson told Mint.
With inputs from IANS