SEBI asks NSE for report as connectivity issue halts trading on NSE for nearly five hours

Mumbai: Trading on NSE, India's largest bourse which handles over 90 percent of the volumes, came to a halt on Wednesday morning due to what the exchange termed as issues with telecom connectivity.

Activity in some segments started facing glitches since around 1000 hrs, within minutes of the markets opening at 0915 hrs, and all activity at NSE ground to a halt at 1140 hrs.

However, trading at the BSE, Asia's oldest bourse which witnesses relatively thin volumes, continued amid the outage at NSE, ensuring that Indian capital markets remained operational.

The issues got sorted in the afternoon, and in an unprecedented move, the bourses extended their trading hours till 1700 hrs as against the usual end of trade at 1530 hrs, probably to make up for lost volumes.

NSE attributed problems at its end to failure in telecom connectivity as services from both the telecom operators it uses went down simultaneously.

"NSE has multiple telecom links with two service providers to ensure redundancy and we have received communication from both the telecom service providers that there are issues with their links due to which there is an impact on NSE system," a statement from the bourse said.

Taking strong note of the events, capital markets regulator SEBI sought an explanation from NSE for trading "not migrating to the disaster recovery site" and asked the bourse to submit its report at the earliest.

NSE should carry out a root cause analysis of the reasons for the trading halt, a statement from SEBI said, adding that it was in constant touch with NSE officials all through the day and monitored the situation closely.

"In view of the exceptional situation arising out of the trading halt, it was decided to extend the trading hours from 1530 hrs to 1700 hrs at NSE, BSE, and MSEI," the Sebi statement said.

However, even after extended trading hours, the overall volumes could not touch the usual averages, NSE data showed. In the equities market, the value of securities traded on Wednesday stood at Rs 45,837 crore, as against an average daily turnover of Rs 72,472 crore in January in the cash segment.

Similarly, in the equity derivatives segment, the total futures and options turnover stood at Rs 30.59 lakh crore on Wednesday, as against Rs 40.32 lakh crore on Tuesday.

Unsurprisingly, rival BSE registered a jump in daily turnover. The trading halt at the IPO-bound NSE comes on the back of similar incidents in the immediate past.

In June 2020, NSE's bank option segment prices were not reflecting on the terminal linked to the exchange. In September 2019 too, the bourse's system faced a trading outage as investors were unable to place orders in the final minutes of trade.

Jimeet Modi, founder and chief executive at Samco Ventures, a brokerage, said there is a precedent of the complete annulment of trades on Muhurat trading day on BSE Futures and Options segment in 2011.

Commenting on Wednesday's outage, he said, "The biggest question in this whole issue is why was the entire market shut just because index feeds were not refreshing? Feeds for underlying contracts were fine and so was order matching, so why shut down the entire market?"

"SEBI and NSE need to quickly look at alternatives here if this isn't getting fixed," he added.

Tata Communications and Bharti Airtel take care of NSE's connectivity. However, there was no statement from the companies. The NSE's 50-share benchmark Nifty gained 1.86 percent to close at 14,982 points on Wednesday. BSE's 30-share benchmark gained 2.07 percent to 50,781 points.