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BSE on Friday, due to a technical glitch, cancelled all trades conducted in the pre-open market session of the day.
The pre-open session, which takes place between 9 - 9:15 am, saw the BSE Online Trading system experience a technology-related glitch. This led to some trade mismatches and the index shot up by more than 1,000 points, say sources close to the development. The trigger computer is said to have immediately noticed the problem leading to cancellation of all the trades in the pre-open session.
“As per a notice issued to the market at 12.30 pm, BSE announced the annulment of 1,354 trades executed during the pre-open session in securities. Further, all pending orders entered during the pre-open session in the exchange system were cancelled,” said a release from the BSE.
Trades conducted during the open session – after 9:15 a.m. – were valid and accepted, said the source. However, the system only stabilised around 9:45 am, he added.
The pre-open session was started by both the BSE and the NSE as a measure to contain volatility in stock prices. The fifteen-minutes of pre-open market session are divided into three parts. In the first eight minutes, all the ‘sell' and ‘buy' orders are executed. In the next four minutes, the trades are matched and confirmation is sent to brokers. The remaining unexecuted orders are then moved to the regular market in the last three minutes of the pre-open session.
The BSE Sensex today ended the day flat, down by 56.28 points (0.3 per cent) at 18,561.92. The Sensex opened the day at 18,694.19. The highest it touched during the day was 18,936.43, while the lowest was 18,513.22.
Most traders and brokers say that they are uncomfortable with the pre-open market session as it is beyond their understanding. “We find it (the pre-open session) very confusing. I have not till date been able to understand the price discovery mechanism and how it works,” said a senior broker.
Brokers were also of the opinion that the pre-open session was of little help to them, but advantageous to those who adopt algo-trading.
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