NSE glitch a blessing in disguise for BSE?

Suresh P Iyengar Mumbai | Updated on February 24, 2021

BSE claims to be the fastest exchange in the world, clocking a median trade speed of six micro seconds   -  REUTERS

Brokers advise clients to shift some trade, though liquidity concerns remain

The frequent technology glitches on NSE may turn out to be a boon for BSE, which claims to be the fastest exchange in the world, clocking a median trade speed of six micro seconds. The regular glitches on NSE has forced many broking firms to consider alternatives including shifting trades to BSE.

“After the frequent breakdowns at NSE, we are advising our clients to shift some of their F&O trades to BSE, though liquidity is an issue at present,” said a head of South India-based broking firm. “But from now, things will change, I believe,” he said and added: “From today onwards, people will seriously look at BSE as an alternative for F&O trade, as they are paying huge cost for depending on single exchanges.”

Exchange-wide position?

Va Nagappan, a market expert, said there are regulations specifying limits on market-wide position, trading members and scrips. It’s high time to split these limits between exchanges and have exchange-wise position limits. Otherwise, this monopoly is dangerously suicidal and will kill traders, he said.

Jimeet Modi, CEO and Founder, Samco Ventures, said the biggest question is why the entire market was shut just because index feeds were had not been refreshing. “Feeds for underlying contracts and order matching were fine. So, why shut down the entire market?

“A similar issue in index feeds had happened a few months ago, but trading was not completely halted. SEBI and NSE need to quickly look at alternatives if the tech glitch is not getting fixed.”

In November, after facing three technical glitches in a matter of three months, the Association of National Exchanges Members in India in a letter to NSE said that was the second major incident after September 24 when a “mysterious tech glitch disrupted trading at NSE.” Such glitches and disruptions at NSE have continued despite a stark warning issued by the exchange’s former chairman Ashok Chawla in January 2018, it said.

“Technical glitch is, proverbially speaking, one more straw on the camel’s back. While such a situation is a Black Swan event, it unfortunately puts the NSE in the spotlight for the wrong reasons,” Ashok Chawla had wrote in a letter to the employees of the exchange.

A spokesperson of Prabhudas Lilladher said the sudden breakdown at NSE gives room for more stability to be found and make the technology infrastructure more sturdy.

Published on February 24, 2021

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