BSE goes down for 3 hours

Govt, regulator ask exchange to explain

A technological snag which left many brokers on the BSE’s network unable to connect to the exchange servers caused the bourse to halt trades for over three hours on Thursday. The BSE was shut for trading from 9.42 am till trading resumed after the problem was resolved at 12.45 pm, according to a statement issued by the exchange.

Capital markets regulator Securities and Exchange Board of India (Sebi) and the finance ministry have sought a reply from BSE on the issue. "Based on the reply, we will decide whether it warrants any action or corrective measures from our side,” said a Sebi source.

The currency segment began operations at 12.34 pm, equity derivatives at 12.36 pm and the cash segment at 12.45 pm.

RECENT TRADING HALTS

• April 7, 2014: Market participants faced difficulties in executing trades due to login and connectivity issues, as BSE moved to a new trading platform called Bolt Plus
  Duration: About 30 minutes

• April 09, 2014: In two days, the exchange again faced problems, as prices on BSE stopped updating and trade execution stopped
  Duration: About 15 minutes

• June 11, 2014: Issues with calculation and updating of real-time data feeds
  Duration: Nearly an hour

• July 3, 2014: Network related issues logged out participants abruptly. Trading in all segments was closed
  Duration: Three hours

“The problem was resolved by 12.15 pm today before the market could be started from the Disaster Recovery Site located at Dhirubhai Ambani Knowledge City (DAKC). As the problem was resolved, after initial testing, it was decided to start the market from the current production site located at the BSE building,” the exchange statement said.

Some orders were executed before the exchange shut down at 9.42 am, but a broker with one of the largest retail broking houses said it was not able to connect at all in the morning, and terminals went online only in the afternoon session.

The BSE is linked with its brokers through more than 10,000 primary network connections through various telecom vendors in addition to BSE’s LAN(Local Area Network) and VSAT(Very Small Aperture Terminal) networks provided by technology company Hughes.

More than 8,000 log in everyday, with each connection potentially linking the exchange to thousands more. By 9:42 am, the primary connections came down to less than 2,000. This triggered a regulation which requires the market to shut down if a certain proportion of users are unable to access it.

“Customers were kept informed. Since most of the actively traded shares on the BSE are also listed elsewhere, they were told that they could make use of the other exchange to complete their trades,” said Vinay Agarwal, executive director, Angel Broking.

“We didn't see any clients being impacted due to the outage. Arbitrageurs might have got a hit. But the NSE-BSE arbitrage business too has shrunk drastically after the advent of algo and high speed trading,” said Nitin Jain, CEO, Capital Markets, Edelweiss Broking

The exchange is still examining the primary reason behind the issue. “As per the pre-defined process, BSE, HCL Comnet and CiSCO will prepare a root cause analysis and present it to the BSE’s technology advisory committee consisting of IT heads of various companies, market experts and academics,” according to the exchange statement.

The report is expected to contain details of what happened, the reasons behind the same, how it was repaired as well steps to prevent recurrence, it added.

Overall volumes came in at Rs 14,823.75 crore, a 64.21 per cent drop from the average volumes so far this month. Cash market volumes fell to Rs 1,428.94 crore on Thursday, compared to this month’s average of Rs 3,985.36 crore. Derivative volumes dropped from Rs 37,439.06 crore to Rs 13,394.81 crore.

“The BSE management is acutely aware of the need to operate the markets on a continuous basis with minimum disruption. It has taken all the steps required to achieve this objective and will continue to take all actions necessary to ensure that the markets function without any disruption in future,” said the exchange statement.