Fresh reports of a technical glitch at the National Stock Exchange of India (NSE) emerged in the morning trading session on March 1, triggering fears that it was a repeat of last Wednesday when India's largest bourse shut down for nearly four hours.
NSE clarified that all segments were working fine, but the two events have put the spotlight on the exchange’s capacity to deal with such incidents.
After the February 24 technical glitch, the exchange said it has been significantly increasing its spending on technology infrastructure for the last few years, adding it has a strong technology governance process. "Over the last 3-4 years, NSE has almost tripled its annual cash spend on capital and operational expenses on technology to approximately Rs 900 crore with a strong technology workforce of approximately 1,500 plus people (employees and vendor staff)," NSE said in a statement on February 26.
Also read: NSE trading interruption: What exactly is a technical glitch, how does it impact investors, and other questions answered
Nonetheless, NSE experienced a similar shutdown in 2017 when the interruption extended to five hours. That is not all.
NSE, which is the world’s largest derivatives exchange by trading volume and the third-largest in the world in the cash equities segment by the number of trades, has experienced at least nine serious technical glitches since 2017, according to a Moneylife report. There were four interruptions last year alone.
Here is the list collated by Moneylife.
10 July, 2017: NSE faced tech glitch which forced it to shut down operations24 May, 2018:
Malfunction of NSE NOW web-based trading software30 August, 2019:
Cogencis reported NSE was unable to upload F&O data for a month23 September, 2019:
Two tech snags occurred19 November, 2019:
Moneycontrol reported that brokers wrote to NSE and complained of losses after ‘technical glitch’; bourse blamed vendor3 February, 2020:
Tech glitch was reported by several media platforms12 February, 2020:
NSE stopped migration to new platform due to tech issue4 June, 2020:
Tech issue hit trading operations
24 July, 2020: Technical issue sky-rocketed prices of Axis Gold ETF and Axis Nifty ETF. NSE cancelled trades.
Moneycontrol reached out to NSE for comment. This article will be updated when NSE responds.
On February 24, while NSE said it was working on the issue, the trading was shut for hours and its decision to re-open the market came very late (post 3 pm). Because of the delayed communication to the market participants, many brokers and traders were forced to square off their intraday positions.
NSE said trading had to be shut down on February 24 as it was not able to move to the disaster recovery (DR) site since its online risk management system was unavailable due to the failure of telecom links.
The Moneylife report said, attributing it to market sources, NSE’s reason for Wednesday’s glitch is not credible.
“They have more than seven telecom services providers. More than 95% orders and more than 65% of all trades come from within NSE’s colocation. It is not that brokers were not able to log in. The real issue was the Exchange was not being able to calculate and distribute indexes at least from 10.07am onwards. Some had suspected that since 9.15am, the index calculations went awry. This may be the real reason for closing the market,” the report said, quoting the sources.
Markets regulator Sebi (Securities and Exchanges Board of India) had earlier put in place a system of interoperability among the clearing corporations.
Post last week's glitch, the regulator said it put out a comprehensive framework to deal with technical glitches at market infrastructure institutions (MIIs).
As per a statement released by the regulator on February 25, MIIs should submit a detailed root cause analysis to SEBI in a time-bound manner after due vetting by the Technology Committee and Governing Board of the MII.
This report will be placed before the Technical Advisory Committee (TAC) of SEBI, which consists of eminent academicians and technocrats.