Markets regulator SEBI on Wednesday asked the National Stock Exchange (NSE) to explain why trading on the bourse did not migrate to a disaster recovery site after facing connectivity issues. NSE should carry out a root cause analysis of the reasons for the trading halt, a statement from SEBI said, adding that it was in constant touch with NSE officials all through the day and monitored the situation closely.
Trading on NSE, India's largest bourse which handles over 90% of the volumes, came to a halt on Wednesday morning due to what the exchange termed as issues with telecom connectivity. Activity in some segments started facing glitches since around 10 am, within minutes of the markets opening at 0915 hrs, and all activity at NSE ground to a halt at 11.40 am.
"In view of the exceptional situation arising out of the trading halt, it was decided to extend the trading hours from 1530 hrs to 1700 hrs at NSE, BSE and MSEI," the SEBI statement said.
The NSE should "explain the reasons for trading not migrating to the disaster recovery site" and asked it to submit a report at the earliest, according to an official statement.
A disaster recovery system helps as a plan-B in times of distress to ensure that activity is not affected.
Trading across segments was halted at 11.40 am on Wednesday due to "issues with the links with telecom service providers", according to the NSE. The bourse said it depends on two telecom service providers for connectivity, and both failed simultaneously resulting in the outage.
"The NSE was also advised to keep the market participants updated with the evolving developments," it said.
In an unprecedented move, the bourses extended their trading hours till 5 pm as against the usual end of trade at 3.30 pm hrs, probably to make up for lost volumes. However, even after extended trading hours, the overall volumes could not touch the usual averages, NSE data showed. In the equities market, the value of securities traded on Wednesday stood at Rs 45,837 crore, as against an average daily turnover of Rs 72,472 crore in January in the cash segment.
Similarly, in the equity derivatives segment, the total futures and options turnover stood at Rs 30.59 lakh crore on Wednesday, as against Rs 40.32 lakh crore on Tuesday.
In June 2020, NSE's bank option segment prices were not reflecting on the terminal linked to the exchange. In September 2019 too, the bourse's system faced a trading outage as investors were unable to place orders in the final minutes of trade.
Jimeet Modi, founder and chief executive at Samco Ventures, a brokerage, said there is a precedent of complete annulment of trades on Muhurat trading day on BSE Futures and Options segment in 2011.
Commenting on Wednesday's outage, he said, "The biggest question in this whole issue is why was the entire market shut just because index feeds were not refreshing? Feeds for underlying contracts were fine and so was order matching, so why shut down the entire market? "
"SEBI and NSE need to quickly look at alternatives here if this isn't getting fixed," he added.
Tata Communications and Bharti Airtel take care of NSE's connectivity. However, there was no statement from the companies.
The NSE's 50-share benchmark Nifty gained 1.86% to close at 14,982 points on Wednesday. BSE's 30-share benchmark gained 2.07% to 50,781 points.