In the wake of an over three-hour technical glitch at the US bourse Nasdaq, the Securities and Exchange Board of India is taking a precautionary stock of trading and risk management systems at the domestic stock exchanges to reassure their robustness.
While the systems in place at leading Indian bourses are considered to be very robust and can withstand any possible technical glitches, it is advisable to conduct a precautionary check after an unprecedented three-hour trading halt at a large exchange like Nasdaq, a senior SEBI official said.
The capital markets regulator and the stock exchanges in India as such conduct regular tests of various risk management systems and trading platforms to ensure their stability against technical and other glitches, he added.
Trading activities were paralysed at Nasdaq yesterday after trading was halted for nearly three hours “due to issues with quote dissemination” on its platform.
The exchange said the halt was due to a “connectivity issue” that has been identified and addressed, while adding that it would further investigate the issue and would take necessary steps to enhance the platform.
Nasdaq has been traditionally favoured by technology companies for trading and some big names trading there include Facebook, Apple, Yahoo and Google. Some of the Indian companies listed on Nasdaq include Sify and Rediff.
IT major Infosys also used to be listed on Nasdaq, but it later moved to another US bourse NYSE, where many other Indian companies like ICICI Bank, HDFC Bank, Wipro, Tata Motors, Dr Reddy’s and Sterlite Industries are included.
The US markets regulator SEC is also looking into the issues at Nasdaq, which had last year also came under fire in the wake of certain technical glitches during the IPO of social networking giant Facebook in May 2012. The exchange later paid a penalty of $10 million to SEC.
The instances of technical glitches in the Indian stock markets have been fewer in comparison to even some much more developed markets, although there have been some cases in the recent past when quotes of individual stocks and some indices were not getting updated properly for small durations.
SEBI Chairman U.K. Sinha had recently said that the capital market infrastructure in India is better than those in many other countries, including some most developed economies.
“We have created market infrastructures which are world-class and where trading today takes place in a much more transparent manner, which is much better than the way market functions in many other parts of the world including some really developed markets,” Sinha had said, while speaking about SEBI’s 25-year journey since it was set up in 1988.