The National Stock Exchange was forced to halt trading for three hours on Monday, after a technical glitch stopped rates from being updated on the exchange. The country's largest stock exchange said it has set up a committee consisting of both internal and external technical experts to look into the issue.
Here are edited excerpts of an interview with the NSE’s Chief of Business Development Ravi Varanasi.
Can you explain to us what exactly happened today?
We had some technical issues crop up while opening the cash market segment. So the technical team tried to restore the market. Since efforts to restore cash markets was taking time, it was decided to stop the F&O segment also after giving a notice to the market. At 9.55 am, the F&O segment was also stopped. Subsequently, some efforts were made to restart the cash market, and it did not get completed successfully. So at 12.15 pm, we were able to reopen the market for both cash and F&O segments. During the entire period, CDS was working. At 12.15 pm, we did the pre-open and 12.30 we opened the market. Subsequently, a few members reported display-related issues. They were rectified, and the market was working absolutely fine.
You said there was a technical glitch. What I understand is that, there was a order matching issue, and that aggravated the entire situation.
No, it was a technical problem, and our technical team is examining the issue.
You were not able to match orders at the opening. Subsequently, the next two times when you tried opening the market, during pre -open again the exchange failed to go on to that mode?
While opening, were a couple of issues that came up, which did not allow us to open the market. The issue was, both the times we had to close the market, and only at 12.15 pm, the sequence worked properly. To the extent, our technical team is doing the root cause analysis, they are getting us the details, and once we have a complete set of details, we will be able to come back with the detailed statement.
So when you opened the market for the fourth time, that was at 12.15 pm, that’s when you opened with canceling all existing, outstanding orders, then you started the market afresh. Prior to that, you were carrying the orders at every opening, right?
Yes, at 12 .15 pm when we opened the market, we cancelled all pre-existing orders.
Why didn’t you try cancelling the orders in the second and third attempt?
Various methodologies are being looked at. The technical team is consistently working to see where the problem is coming up. They were looking at options at every single point of time and they could successfully work on it, and reopened the market at 12.15 pm. The analysis is on, we will come back with the detailed statement.
The biggest criticism has been that you kept the F&O segment open till 9.55 am, despite the fact that the cash market segment was closed.
As I said, at 9.15 am when the cash market opening was to happen, it started creating a bit of a glitch. Our technical team tried to overcome that. While this was being done, when they realised that it will take some time, we had to tell the market that we are shutting down the F&O segment, a notice was given and then at 9.55 am it was closed.
You had roughly half an hour when the futures market running and the underlying market was shut.
You have to understand, when at 9.15 am the issue came up, they were trying to fix the issue. It looked like they will be able to fix it. They were looking for a solution at that point of time. Subsequently when it appeared that it will take time, the F&O market was closed.
Was the issue on the hardware side or the software side?
Let the technical analysis be done first. Let the analysis take place, only then we will be able to conclusively say what really happened. So there is no point in speculating at this stage.
You have a disaster recovery site that could have been activated.
The DR site activation also would have taken time. So the first preference would be to open the market from the primary site. The DR site does take time, the process was to open the market from the primary site. That has been done, and it finally worked. So we will do the analysis. At this stage it is too early to conclusively say what was the root cause. We are looking at it, we will come back and make a statement.
Has the entire issue been identified now?
Work is on. Since 12.15 pm, we have been able to restart the market, it worked fine. The technical team has given the comfort that it is absolutely fine, we did not face any issues once the market opened. So we are examining, the technical team is looking into details, we will be able to come up with the details subsequently.
Is there an audit that will be done of the technical glitch?
We will look into it.
I understand, the finance ministry has asked for a report from SEBI, and I assume SEBI will do the same? Ask you for a report?
All the details will be examined, whatever details will have to be submitted to the regulator, will be submitted.
And by when do you expect that to happen?
I can not put a time to that. It is important for us to complete the examination and come back with the details, which we will be able to do in a time bound manner. It is difficult for me to say when exactly it will happen.
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So, you will submit the report of the technology committee of the exchange?
Yes.
And then it will go to the board, and the board will submit to SEBI?
As of now, we have informed the technology regularity committee, that part is already happening. So let’s take it step by step.
There was a delay in decision-making in NSE. Is the leadership vacuum delaying decision making?
It is purely a technical issue, which has been responded to. A technical problem needs to be responded to, and be closed as soon as possible. That has been done.
The market was worried because no communication was forthcoming from the exchange.
You see, we have been consistently sending communications in terms of the market, what has been happening, when the market will open, throughout the period we have been consistently sending communication to the market, speaking to the market. We kept on updating the status on our website.
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