To begin with, we at SAMCO would like to sincerely apologise for the inconvenience and pain caused to you by today’s technical glitch at NSE. It was an unfortunate day and NSE’s lack of communication made life tougher for everyone in the market.
Sequence of Events
- 10:00 am: NSE feed issue for Nifty and Bank Nifty
- 11:40 am: NSE halted trading for all segments
- No clarity from NSE on re-opening markets
- 3:10 PM: SAMCO notifies customers of squaring off NSE cash market positions in BSE cash segment.
- “For all open intraday positions MIS BO CO positions in NSE Cash segment, we will be endeavouring to square off in BSE on a best effort basis after 3:15 pm.”
- 3:16-3:18 pm: Most MIS, BO, CO open positions in NSE were squared off in BSE cash markets.
- No clarity on the reopening of markets yet.
- 3:20 pm: NSE notifies re-opening of Cash & F&O normal markets at 3:45 pm after 15-minute pre-opening session from 3:30 – 3:45 PM
- 3:30 pm: SAMCO notifies customers on the following:
- NSE F&O/CDS update
- As per NSE, F&O markets will open at 15:45 pm and close at 17:00 pm. We will square off all intraday (MIS/CO/BO) positions in F&O and Currency CDS as soon as the markets open.
- NSE Cash update
- NSE cash markets will open at 15:30 pm for pre-open and normal market trading will start at 15:45 pm and close at 17:00 pm. Most intraday positions have been squared off on BSE, if any positions are open we will square it off in NSE cash market.
- NSE F&O/CDS update
- 3:45 pm: Markets re-opened with extremely illiquid and poor market depth.
- 3:55 pm: Once markets settled with reasonable liquidity and proper price discovery, SAMCO proceeded to square off MIS, BO, CO positions in F&O segment and all intraday F&O positions were squared off between 3:55 pm and 4:30 pm.
A few important explanations:
1. Why did we square of NSE Cash MIS, BO, CO Positions in BSE at 3:16-3:17 pm?
MIS, CO, BO orders are leveraged orders which involve an element of funding and exposure by the broker. As per our RMS policy, we square off all MIS, CO, BO orders after 3:15 PM.
Usually, we square off orders and positions in same exchanges. However, since NSE was not open today, we had no choice but to square off in BSE.
Due to the interoperability of exchanges, interexchange trades can now be settled intraday which led us to take this step.
There was no clarity of reopening of NSE and extension at the time of square off. NSE only notified of extension after 3:20 pm. We had already completed square off as per our policy by then. We regret if customers may have had to bear the brunt of impact cost due to square off on BSE.
Also, had we not squared off on BSE and NSE would have not opened, there would have been a delivery settlement risk since short positions would have been auctioned and long positions would have resulted in delivery beyond balances available in customer accounts. At the time of square off, we were completely unaware if NSE would re-open or not and therefore acted accordingly.
2. Why did we square off NSE F&O MIS after 3:55 PM and not wait till closing of market or any other time such as 4:30 pm or 4:45 pm?
Unlike in Cash segment where BSE is reasonably liquid, the option of squaring off F&O segment orders were not available. Had NSE not opened the markets, this would have resulted in NSE overnight positions and higher margin obligations and possibly margin penalties.
Further MIS, CO, BO orders are leveraged orders which involve an element of funding and exposure by the broker and therefore we were actively encouraging customers to convert positions from MIS to NRML to avoid any implications of square-off. Taking overnight risk in such cases would possibly result in much larger issues and risks. Further, as per our RMS policy, we usually square off and are entitled to square off all MIS, CO, BO orders after 3:15 pm.
Ideally, we should have squared off positions at 3:45 pm immediately on opening of F&O segment as we notified. However, we waited till 3:55 pm to begin square off for two reasons. First, to allow markets to settle. Second, for the availability of two-way quotes in exchanges.
Upon closure of positions in MIS, customers always had the option of re-initiating positions in NRML segment. There were no restrictions placed on NRML trading. However, basis our assessment and to avoid overnight risk we took a decision to square off at 3:55 pm which was after 3:15 pm as per our notified RMS policy.
Further, in earlier instances of exchange glitches, usually, there are repetitive glitches and exchanges often shuts down again. This happened in 2017, where they re-opened, shut, re-opened and glitches kept going on. Keeping that in mind, we took a call to square off as soon as possible and as markets re-opened to avoid overnight risk and margin penalty risk.
Once again, we are sorry that you had to go through the consequences of this glitch at NSE.
We hope you understand our position in today’s episode and appreciate all the actions taken by us. These were in the interest of our customers.
Promising you our best services always.