A NSE (National Stock Exchange) building is seen in Mumbai, India, July 10, 2017. REUTERS/Shailesh Andrade
MUMBAI: A technical glitch shut down India’s National Stock Exchange (NSE) for five hours on Monday, dealing the country’s biggest stock exchange an embarrassing blow ahead of its plans to list and leading to a surge in volumes on a rival bourse.
Trading resumed fully on Monday afternoon, with quotes for individual stocks finally restored with just over an hour of trade left after three attempts at re-opening. The disruption frustrated traders and put a spotlight on the exchange at an awkward time.
The NSE’s plans for a listing that bankers say could raise as much as US$1bil have been delayed by a regulatory investigation due to its disclosure in December that some brokers may have been provided unfair access to its servers in recent years.
In a statement late in the day, the NSE attributed the disruption to an unidentified ”technical problem”.
“NSE deeply apologises for the glitch. The matter is being examined by the internal technical team and external vendors, to analyse and identify the cause which led to the issue and to suggest solutions to prevent recurrence,” the exchange said.
Two sources familiar with the matter said it was an internal issue, ruling out any external cyber attack or hacking.
The finance ministry has asked the NSE and the market regulator, the Securities and Exchange Board of India (SEBI), to submit a report within the next two days on the reason for the disruption, a senior ministry official said.
That will further raise scrutiny of the NSE, which submitted an application for an initial public offering in December but has yet to win approval for the listing from the SEBI.
The NSE has also been suffering from management upheaval after previous chief executive Chitra Ramkrishna resigned shortly before the NSE’s disclosure about the potentially unfair access provided to traders, citing personal reasons.
Newly appointed CEO Vikram Limaye is due to take over later this month.
Traders fume
The disruption, which affected traders from the open, surpassed a three-hour disruption suffered by its rival exchange, the BSE Ltd, in July 2014 because of a network outage, leaving traders fuming about the lack of communication.
Although markets finally re-opened for trading at midday on Monday, traders were frustrated that individual stocks were not updating until later, or were suffering wide gaps in bid and offer prices.
Most traders switched to the BSE, which saw a surge in trading volumes by about 50% from last week’s average, while shares rose as much as 1.2% to a record high.
After resuming trading, the NSE’s broader index also rose as much as 1.2% to a record high, but volumes were only a fraction of the average seen last week.
The NSE, however, is by far the larger index of the two, and hence any disruption is felt more widely.
Varun Khandelwal, managing director of brokerage Bullero Capital, criticised the NSE for keeping traders in the dark.
He said the exchange then compounded the confusion with failed attempts at re-starting trade and by allowing derivatives trading to go on before finally fixing the lack of stock price updates.
“Such a situation is very unfortunate and reflects very poorly on the managerial oversight at the NSE presently,” he said. - Reuters
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