Investors should deal with more than one exchange: BSE's Ashish Chauhan

Speaks about today's 3-hour long trading halt at the NSE

While trading was halted for three hours at the National Stock Exchange (NSE), it was “business as usual” at the BSE, which reported nearly thrice its average daily turnover in the cash segment. In an interview to Samie Modak, Ashish Chauhan, MD & CEO of BSE, says it is prudent for investors to deal with more than one exchange as a risk management strategy. Edited excerpts:

NSE had to halt trading for three hours due to a glitch. BSE functioned normally. What’s your reaction? 

If you have two large exchanges, an issue like today (Monday) can be better handled. If one exchange is down, people have a choice to trade on the other exchange. Ultimately, if investors deal with more than one exchange, it is better risk management. It is like not putting all your eggs in one basket. 

You think traders would spread their bets across both NSE and BSE after today?

I don’t know. It will have to be seen how it plays out. 

But do you think it is a more prudent strategy?

It is always good to diversify. It is better risk management. 

What could be the fallout of Monday’s issue at the NSE?

Once the root cause is identified, there will be a discussion among the regulatory community to ensure that a similar thing doesn’t reoccur. That will be the main outcome. We will have to find ways to make systems more robust. That activity will continue over the next few weeks. To understand the root cause and ensure it doesn’t happen to the exchange again. 

In 2014, BSE faced a similar glitch and trading had to be halted. What were the subsequent steps taken? 

After 2014, BSE took several measures. The technical advisory committee of the BSE and the Securities and Exchange Board of India (Sebi) had done fact-checking and recommended certain steps. The markets regulator has also issued more robust guidelines in terms of periodic backups. BSE has implemented all suggestions of the technical advisory committee and Sebi. 

Was there any extra load on BSE as more traders would have shifted to your exchange during the halt of trading on the NSE?

BSE has extremely high order processing capacity of around 500,000 orders per second. It has one of the largest capacities and also is (one of the) fastest stock exchange systems in the world. We didn’t face any issues in handling the additional trades. BSE can easily handle 10 times more than what it handled today (Monday).