What was the reason for the suspension of trading by NSE on 24 February?

On 24 February, there was almost an atmosphere of chaos amongst the traders on the NSE. The National Stock Exchange or the NSE suspended trading in cash and derivative segments for several hours during the day virtually jeopardizing the open positions of lakhs of retail, HNI and institutional market participants and traders in the process.

The ostensible reason provided by the exchange was that there were issues with its telecom service providers being the reason for the glitch. But the real issue about the way it was communicated to the members of the exchange and also to the regulator. For example, the screens started updating prices at around 10.08 am but the official announcement was made by SEBI only after 11.40 am.

If communication was one part of the problem, the other issue was the redundancy. Logically, if the main site goes down, the NSE is supposed to automatically shift to the redundancy website but that did not happen. The explanation offered by the NSE was that both its telecom connections to the main trading link and the redundancy link were down.

The trading eventually commenced at 3.45 pm and both BSE and NSE announced extended timings till 5.00 pm. The pressure created was huge on account of the halt happening just one day ahead of the F&O expiry and with most positions locked in the NSE in the F&O segment. The SEBI and the Ministry of Finance have sought a detailed explanation from NSE on the root cause analysis and the remedial measures proposed to be take in future.