Bombay Stock Exchange trading halted by network glitch

A network outage at the Bombay Stock Exchange halted trading across all of its markets for more than two hours on Thursday morning, in one of the longest shutdowns in the history of Asia's oldest bourse.

HCL, the network service provider, eventually fixed the problem, and earlier orders were cancelled and trading started afresh.

"It is embarrassing," said Vinay Agrawal, executive director of equities at Mumbai-based Angel Broking.

The disruption did not bring business to a halt, however, as the National Stock Exchange, India's other major bourse, operated as usual.

"The network management tools are available to prevent such kinds of outage issues from occurring," said Deven Choksey, managing director of KR Chokey, a financial consultancy. "It would demand some amount of upgrading and modernisation of the network."

More than 5,300 companies are listed on the BSE, which handles 20 per cent of the country's trading in cash equities and more than 30 per cent of India's derivatives. But the exchange is facing heightened competition, especially in the derivatives sector.

"The competition has increased," said Jagannadham Thunuguntla, head of research at SMC Global. "There are two large players and the NSE since the beginning has had a technological advantage, so the BSE is trying to catch up."

BSE recently switched to Deutsche Borse Group's Eurex technology platform to improve speed and reliability, planning to replace its derivatives market platform over the course of last year and later replace its cash market platform.

Thursday's shutdown was not related to the new platform and the BSE confirmed that there have been other "trading snags" over the past few months where the index was not updated for a few minutes.

The NSE was at the centre of another glitch in October 2012, which brought the stability of India's trading systems into question after an errant trade caused the benchmark index to tumble, briefly wiping about $58bn from the market value of some of India's biggest companies and forcing the exchange to halt trading.

Such glitches, although rare and discomforting, are not peculiar to India with malfunction in exchanges from Singapore to the US in recent years.

Thursday's shutdown comes at a time when India's equity markets are in particular focus, amid a wave of investor optimism that a strong new government under Narendra Modi will push through reforms and usher in a fresh period of growth in Asia's third-largest economy.

"The sentiment is absolutely positive and these kinds of glitches are obviously a setback," Mr Agrawal added. "In the past 45 days, retail participation has increased significantly."

The NSE's benchmark Nifty index and the BSE's Sensex were both down marginally at 3.30pm in Mumbai, at 7,719.15 and 25,820.38 respectively.

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