Now the BSE has complained to market regulator SEBI that interoperability between its own clearing corporation and that of the National Stock Exchange did not work on Wednesday. The BSE has told SEBI that nothing was wrong at its end but NSE did not allow orders to flow to it, sources told BusinessLine . However, SEBI in the evening issued a clarification, which said interoperability was working fine.

Interoperability allows brokers to execute trades on another exchange even when one exchange is down. During a four-hour outage at NSE on Wednesday, largely no trades from its platform moved to the BSE under interoperability. Even a letter written by NSE brokers association to SEBI on Thursday said that interoperability did not work.

Experts say that interoperability failure blunts NSE’s clarification that there was a problem with leased line providers, which are the telecom operators. It shows there is much more to the system outage at the largest stock exchange, a legal expert said.

Meanwhile, SEBI’s clarification on interoperability has surprised many brokers. “It is pertinent to note that despite the trading halt, the framework of interoperability put in place by SEBI facilitated market participants to continue their transactions at other stock exchanges, thereby allowing them to seamlessly trade / square off their existing positions. The same is evident from the fact that equity turnover at BSE jumped to ₹40,600 crore on February 24 as compared to average daily trading turnover of approximately ₹5,200 crore during the previous 30 days,” SEBI said in its release

Bosch drives volumes

However, brokers say that data shows no massive jump in BSE’s trading volumes as claimed by SEBI. Wednesday’s volumes on BSE actually pertain to “block deals between two promoter entities of Bosch India Ltd that were executed at around 8.57 am in a separate trading window,” brokers said. In the ₹40,000 crore worth volumes on the BSE as claimed by SEBI, around ₹29,000 crore worth were due to the block deals. Nearly 2 crore shares of Bosch at ₹14,742.60 a share changed hands at the BSE. Hence, interoperability had nothing to do with it, as some made direct trading on the BSE, they added.

On the NSE, the index calculation and feeds were witnessing a problem since around 10.08 am on Wednesday following which the exchange suspended trading at 11.40 am. Till 3.20 pm, the NSE did not issue any further statement. At around 3.20 pm, NSE said it was starting the markets in 10 minutes at 3.30 pm, which took the stock markets by surprise. Till 3.30 PM, brokers had squared-off many client positions at huge loss, the ANMI letter to SEBI has highlighted.

“There are rules regarding market-reopening and how exchanges give only 10 minutes notice in restarting amidst such chaos,” leading Mumbai broker said. “If index hits the upper circuit after the second half then trading is suspended for the entire day. Sufficient notice is given. SEBI has to dig deeper.”

“Over and above the market design of interoperability, which facilitates a market participant to trade on multiple trading platforms, the decision to extend the market timings also enabled investors to square off their existing positions,” SEBI release said.

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