Despite the disaster management drills and mock trading sessions, exchanges do remain prone to errors and technical glitches. On Monday, in one such glitch – perhaps the longest in the history of the National Stock Exchange (NSE) – trading in both cash and the futures & options (F&O) segments came to a grinding halt at around 9:55 am.
Though such instances are not limited to the Indian exchanges only, experts feel both the exchanges and the regulator need to address these issues on a priority basis.
Also Read: Sensex hits new high, crosses 31,600; NSE above 9,700 after trading resumes
NSE is the leading stock exchange in India and the fourth largest in the world by equity trading volume in 2015, according to World Federation of Exchanges (WFE). The average daily turnover, according to the exchanges’ website in the F&O segment, stood at Rs 5,33,261.14 crore in 2017-18, up 40% from Rs 3,80,525.41 crore in 2016-17.
Impact on investors / traders
So, should you be worried in case you placed your order in the cash and/or the F&O segment? And, what do you stand to lose in such a situation?
Experts say investors in the cash segment should not worry much, as their trades on the NSE can be squared off against fresh orders on the Bombay Stock Exchange (BSE). Since most stocks are available on both the exchanges, the cash segment impact would have been limited.
Also Read: FPIs, MFs pump in over Rs 97,000 crore in stock markets in six months
“Since the problem is mostly in the F&O segment, the market regulator – Securities and Exchange Board of India (Sebi) – needs to step in. There will not be much problem in the cash segment, as the trades can be squared off in the BSE. Only those traders / investors that have a derivative position will face difficulty. I think Sebi will step in and the trading hours could be extended,” says G Chokkalingam, founder and managing director of Equinomics Research & Advisory.
Chandan Taparia, derivative analyst at Motilal Oswal, on the other hand, says that the orders placed and executed before 9:55am will be accepted.
“The orders that were placed and could not be executed before the problem started will be cancelled. Investors will have to place orders afresh once the exchange opens for business and the system stabilises,” he says.