India’s largest bourse shut down for nearly four hours on Wednesday due to what it said was a telecom network glitch, and its operators drew fire from traders for a lack of transparency over the problem, which they said caused “absolute havoc”.The National Stock Exchange opened around 9:15 a.m. local time as usual, but traders said prices on its main indexes stopped updating about an hour later.
At 11:40 a.m., the NSE shut down completely for trading, leaving traders wondering what would happen to their open positions.
The incident occurred just ahead of the monthly derivatives expiry on the last Thursday of the month, when traders close or roll over their open positions.
“This was an unmitigated disaster because you need to communicate this proactively. Not one person in the market knew they would shut down the exchange,” Varun Khandelwal, director at Bullero Capital, a New Delhi-based proprietary trading firm.
The first public news of the 11:40 a.m. shutdown came via social media and to the broader media around 20 minutes later.
The NSE said it had multiple telecom links with two service providers but had problems with both of them.
“People believed things would come back up in half an hour or an hour. But this complete lack of transparency from NSE created absolute havoc,” said Jimeet Modi, founder of brokerage Samco Securities.
The NSE did not respond to a request for comment.
Trading resumed after almost four hours, and the exchange extended market hours until late evening.
The NSE Nifty 50 index eventually ended the day 1.9% higher as financial stocks rose after the finance ministry announced that private-sector lenders could carry out government transactions such as taxes and pension payments.
Market participants questioned why the NSE did not have a backup plan, especially after it experienced a similar five-hour shutdown in 2017.
India’s market regulator in the evening asked the NSE to carry out a “detailed root cause analysis” and explain the reasons for trading not migrating to a disaster recovery site.
Anup Khandelwal, president of the Association of National Exchanges Members of India, told Reuters investors and brokers had lost money as many started closing open positions at lower prices on BSE Ltd., another stock exchange that rivals the NSE.
Zerodha, the country’s top brokerage firm which says it contributes to more than 15% of all Indian retail trading volume, sent multiple mobile-app alerts to its users and said it was in talks with the NSE.
On Twitter, #zerodha became a top trending hashtag as worried users asked questions about their portfolios.
“The sad state of today’s glitch is that no one ‘will’ take any responsibility of traders’ losses whatsoever. Not any broker and not even @NSE,” said Twitter user Rushikesh T.