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| Glitch helps bulls smile for a while |
| BS Reporter / Mumbai Jul 16, 2011, 00:24 IST |
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Sensex rises 1,000 points in the morning due to a technical problem.
 It is nowadays rare to see a bull smile on Dalal Street. Friday was different, as the bulls saw a sudden 1,000-point Sensex rally flash on their screens. But before they could rejoice, it became clear that the reason was a technical glitch.
During the morning session, the 30-share Sensex of the Bombay Stock Exchange (BSE) zoomed to 19,619.65. This was 1,001 points, or 5.40 per cent, higher than yesterday’s close. But no sooner did this occur that the exchange realised it was due to a technical glitch and flashed a warning message on all its trading terminals. The Sensex ended the day with a marginal loss of 56.28 points.
Later in the day, BSE announced the annulment of 1,354 trades executed during the 15-minute pre-open session that was introduced by the Securities and Exchange Board of India in October 2010 to curb volatility during the first few minutes of trading.
“Trading members of the exchange are hereby informed that today... due to certain technical glitches the pre-open matching system had been impacted,” said a BSE notice. “In order to ensure fairness and transparency in the price-discovery mechanism... all pending orders emanating from the pre-open session shall be cancelled from the BOLT... all trades emanating from the orders (buy/sell) from the pre-open session shall be annulled,” it said.
This means even if a trade was matched during the pre-open session, it has been cancelled. Pending orders that were moved to the normal trading session after 9:15am would also be null and void. This is necessary as the sharp rally means the shares changed hands at artificially high prices.
This is not the first time a glitch has occurred on BSE. On November 1, 2010, the exchange had to halt trading for over two and a half hours due to a problem in the software, which was unable to send trade confirmation. This even led to the capital market regulator demanding an explanation from Asia's oldest stock exchange.
The exchange's trading platform is called BSE Bolt (BSE Online Trading). Developed by CMC (a Tata Group company), it was launched in 1995. It has been subject to several changes since and handles 2.5 million trades and 18 million orders every day.
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