Sebi Orders Probe, Seeks Report from NSE on 'Trading Halt', to be Submitted in Next 48 Hours

3 months ago 8

The Securities and Exchange Board of India (Sebi) has sought a report from the National Stock Exchange (NSE) on shutdown of trading at the exchange on Wednesday and the stock exchange will submit a preliminary report in this regard by Friday.

Trading at the NSE was halted for much of the day today following a technical glitch. “Sebi has sought a report from NSE on today’s shutdown. NSE will submit its report in the next 48 hours and a detailed root analysis will also be submitted by NSE after this preliminary report,” Moneycontrol quoted a source.

A Mumbai-based broker, who did not wish to be identified, raised serious concern over shutting down on an exchange, especially near expiry day.

“In the last several instances, the technical glitch happened near expiry or high-volatility days. Like today the technical glitch happened just a day before the monthly expiry. Similarly, last year on June 4, Bank Nifty rates were not updated when there were expectations of closing at a lower price. Similar situation occurred in 2017, on July 10, just a day after the Sebi announcement on banning P-notes. Is this coincidence or something (else), the regulator should investigate,” the broker said.

The capital markets regulator had earlier imposed a penalty of Rs 50 lakhs on the exchange due to several technical glitches. Sebi has a plan to compensate investors for losses due to technical glitches. However, the method of compensation is yet to be finalised.

Sebi has advised the exchange to carry out a detailed root cause analysis of the “trading halt” witnessed today and also explain the reasons for trading not migrating to the disaster recovery site. The body has also asked NSE to submit its report at the earliest. The exchange had informed that trading was halted at 11.40 am Wednesday due to “issues with the links with telecom service providers” and it continued till 3.30 pm.

Sebi was in constant touch with NSE officials and continued to monitor the situation closely. During the halt, NSE was also advised to keep the market participants updated with the evolving developments.

In view of the exceptional situation, it was decided to extend the trading hours from 3.30 pm to 5.00 pm at NSE, Bombay Stock Exchange (BSE) and Metropolitan Stock Exchange of India (MSEI).

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