Bombay Stock Exchange goes blank for 3 hours; turnover halves; Sebi, FinMin seek report

Written by PTI | Mumbai | Updated: Jul 4 2014, 03:39am hrs
BSE SensexBrokers sitting idle during a network outage at the BSE on Thursday. (PTI)
A technical glitch (network outage) halted trading on the Bombay Stock Exchange (BSE) for three hours today, resulting in steep losses in its turnover and prompting market watchdog Sebi and the Finance Ministry to seek a report from the bourse.

The benchmark index Sensex opened the day with an over 83 points gain at 09.15 hrs to hit another record-high of 25,924.25. But about 30 minutes later at 09.42 hrs, a glitch developed on its network and the trading was halted across all platforms of the exchange, including equities and currencies.

It resumed trading with another pre-open session after three hours. It closed the day lower by 17 points at 25,823.75.

"Sebi and the Finance Ministry have sought reports from us following the worst technical glitch in our modern history. We will be sending the same by the end of the day today," BSE Managing Director and Chief Executive Ashishkumar Chauhan told reporters here in a hurriedly called presser at the exchange headquarters in South Mumbai.

Motilal Oswal Securities Chairman Motilal Oswal said: "Though there is no systemic issues at the BSE technology platform, it is very important issue. What is more surprising is that why its disaster resolution system took three hours to activate, while the very purpose of the DRS is real-time crisis resolution.

"...At the end though investors did not lose any money, BSE badly lost the turnover".

At the end of trade today, BSE's derivative segment's total turnover tumbled 74 per cent to Rs 13,394.80 crore, while equity segment's turnover tanked 67 per cent to Rs 1,429.99 crore compared to the previous closing levels.

"There was a corresponding drop in volume at the BSE today due to a network outage," Destimoney Securities MD and CEO Sudip Bandyopadhyay said.

This is the second time in two months that Asia's oldest stock exchange, set up in 1875, faced a technical snag. The last time it happened for a short while was when BSE's new BOLT platform for currency trading faced was launched.

The exchange, which has over 5,000 companies listed, will be sending a detailed report called 'root cause analysis' after technical assessment to Sebi and the Finance Ministry at the earliest, Chauhan said without indicating any timeframe.

Asked about the impact on volume due to the 3 hours 3 minutes outage that was triggered by a hardware malfunctioning at the end of BSE vendors Cisco and HCL, Chauhan, without quantifying, said since half of the trading hours had been lost and pre-crisis trades were cancelled, the impact could be well over two-thirds of the daily average volume, which is around 2 million trades.

He said investors would not have been impacted as they had other rival platforms to trade. The market was closed from 9.42 am to 12.45 pm, the exchange said.

On the reason behind the outage, Chauhan said, "the BSE faced network related issues. Several users were logged out abruptly due to misbehaviour of some of the components on the BSE network.

The network has over 10,000 primary connections with all telecom vendors participating in it in addition to our own LAN and VSAT network provided by Hughes."

"Every day, over 8,000 connections log in. Each primary connection can potentially have several thousand users.

"However, at 9.42 am today, the number of primary connections crashed to under 2,000, forcing us to shut the market as per current Sebi regulations applicable to closure of markets," Chauhan explained.

The BSE said after hectic efforts the tech team, including experts from Cisco's US team and other support locations, was able to isolate and resolve the problem by 12.15 pm, thus preventing the restart from the exchange's Disaster Recovery Site located about 50km away at Dhirubhai Ambani Knowledge City in adjoining Navi Mumbai.

"As the problem was resolved, after the initial testing, it was decided to start the trading from current production site located at the BSE towers.

"Subsequently, the currency market started at 12.34 pm, equity derivatives market at 12.36 pm and equity market started at 12.45 pm. The equity market had pre-open period from 12.37 pm to 12.45 pm," the BSE added.