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NSE shuts trading for 4 hours over technical glitch

Nifty index

The problem was noticed about an hour into trading as traders complained that the Nifty index and the Nifty Bank Index, had stopped updating

Stocks surged nearly 2% on Wednesday, finishing a turbulent day that saw trading on India’s National Stock Exchange (NSE) disrupted for nearly four hours because of a technical glitch.

The outage prompted NSE and rival BSE to extend trading hours until 5pm on Wednesday to allow investors to close their positions ahead of Thursday’s expiry of monthly derivatives contracts. Many investors couldn’t as brokerages squared off open positions to mitigate risks.

NSE accounts for 80% of India’s trading volume in derivatives. The first signs of a problem were noticed about an hour into trading as traders complained that NSE’s benchmark Nifty index and the Nifty Bank Index, had stopped updating.

After about an hour of confusion, the exchange halted trading in all segments, including derivatives and cash, citing ‘issues’ with the telecom links of its two service providers, which it claimed caused the system to stop updating prices.

As trading resumed at 3.45pm, stocks surged, confounding investors with the sheer velocity of the rally. Analysts said the rally was prompted by investors and brokerages trying to square off trades. BSE continued normal trading in all segments through the extended trading day.

After trading came to a halt on NSE, the exchange notified traders that it received communication from its telecom service providers that there are issues with their links.

We are working on restoring the systems as soon as possible. In view of the above, all segments have been closed at 11.40am and will be restored as soon as the issue is resolved, an NSE spokesperson said in a statement in the afternoon.

The Securities and Exchange Board of India (Sebi) has advised NSE to carry out a detailed analysis of the issue.

Market participants and brokerages said NSE could have handled the situation better.

Bharti Airtel, one of the telecom service providers to NSE, said it has received no communication from NSE.

Airtel is awaiting NSE’s RCA (root cause analysis) of the technical snag. Based on RCA, the company will move forward and respond accordingly, said a company executive aware of the matter.

The BSE Sensex added 1,030.28 points, or 2.07%, to 50,781.69, while the Nifty advanced 1.86% to 14,982.

Volumes on NSE were expectedly lower than the recent average. However, volumes on BSE at ₹40,700 crore were the highest since March 2017, due to diversion of trades, said Deepak Jasani, retail research head, HDFC Securities.

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