Markets

NSE asks TCS to explain Monday’s software glitch

PALAK SHAH Mumbai | Updated on January 11, 2018

NSE

Exchange also seeks clarity from SEBI on operational aspects



The National Stock Exchange (NSE) has asked IT services major TCS, the principal technology service provider for the exchange’s main trading engines, to investigate Monday’s software glitch.

The NSE had suspended trading on its platform for nearly three hours on Monday due to an alleged technical fault. The exchange’s cash equity segment had collapsed in the pre-opening session itself, possibly on the back of heavy order flows.

“It was found that there was a communication issue between NSE’s order matching engine and data system layer, which could have caused the glitch,” a source close to the exchange said.

The source further said that the NSE had reconstructed the scenario and found the communication issue could have led to multiple issues, delaying a resumption in trade.

TCS has been the key software and tech support provider for the NSE since the exchange’s inception in 1994. But the software has undergone several modifications in the past few years.

While TCS declined to comment, industry sources said the glitch on Monday could have occurred on a third-party patch and consequently all vendors have been told to look into their systems.

More guidelines needed

The NSE will also be requesting clarity from market regulator SEBI on some operational aspects, such as allowing trading in other inter-dependent segments in the case of a shutdown in unforseen circumstances, the source said.

SEBI rules mandate that exchanges should be shut in case of key benchmark indices hitting a certain circuit threshold, but there is no clear regulatory guideline on what is to be done during incidents such as the one on Monday.

While some questioned the NSE for allowing the equity derivative segment to trade for 40-45 minutes despite a shutdown of the cash segment, others criticised the exchange for shutting down the derivative segment when there were no issues. Derivative trading worth around ₹80,000 crore had been recorded before the NSE shut the segment.

In a note on Tuesday’s trading, the NSE said its cash segment functioned normally, without any hitch. The derivative and currency segments also continued to function normally and settlements in the cash and derivative markets went through smoothly.

It said over 97.4 lakh trades took place in its cash segment at a value of ₹26,456 crore, and 14,483.62 lakh shares were traded in Tuesday’s session.

Published on July 11, 2017

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