The Securities and Exchange Board of India (Sebi) has sought a report from the National Stock Exchange (NSE) on shutdown of trading at the exchange on February 24. The NSE may submit a preliminary report by Friday.
Trading at the NSE was halted for much of the day today following a technical glitch.
“Sebi has sought a report from NSE on today’s shutdown. NSE will submit its report in the next 48 hours and a detailed root analysis will also be submitted by NSE after this preliminary report,” a source close to the development told Moneycontrol.
“Top officials of Sebi are upset with NSE about regular technical glitches on the exchange,” another source told Moneycontrol.
A source told Moneycontrol, “NSE needs to work on its technical architecture which is facing serious issues on a regular basis.”
“The exchange should invest more on technology, which it is avoiding before their own initial public offer due to high expenses that will weaken their balance sheet,” the source added.
A Mumbai-based broker, who did not wish to be identified, raised serious concern on shutting down on an exchange, especially near expiry day.
“In last several instances, the technical glitch happened near expiry or high-volatility days. Like today the technical glitch happened just a day before the monthly expiry. Similarly, last year on June 4, Bank Nifty rates were not updated when there were expectations of closing at a lower price. Similar situation occurred in 2017, on July 10, just a day after the Sebi announcement on banning P-notes. Is this coincidence or something (else), the regulator should investigate,” the broker said.
The capital markets regulator had earlier imposed a penalty of Rs 50 lakhs on the exchange due to several technical glitches. Sebi has a plan to compensate investors for losses due to technical glitches. However, the method of compensation is yet to be finalised.
SEBI has advised the exchange to carry out a detailed root cause analysis of the “trading halt” witnessed today and also explain the reasons for trading not migrating to the disaster recovery site.
It has also asked NSE to submit its report at the earliest. The exchange had informed that trading was halted at 11.40 am today due to “issues with the links with telecom service providers”.
SEBI was in constant touch with NSE officials and continued to monitor the situation closely. NSE was also advised to keep the market participants updated with the evolving developments.
The “trading halt” continued till 3.30 pm. In view of the exceptional situation arising out of the “trading halt”, it was decided to extend the trading hours from 3.30 pm to 5.00 pm at NSE, Bombay Stock Exchange (BSE) and Metropolitan Stock Exchange of India (MSEI).