Sebi tracking system found wanting
Markets regulator Securities and Exchange Board of India's integrated market surveillance system, set up in 2007, needs to be stronger, as it failed to advise or alert the NSE about last week's system breakdown in advance even though volumes soared towards monthly derivatives expiry date.
During the February 24 hallt of trade, the NSE was in close contact with the Sebi and keeping it updated on developments, as per an NSE statement.
Indian bourses are facing such glitches regularly but the regulator so far only has surveillance systems built for suspicious transactions like insider trading, front running and not for keeping a watch on the robustness of the market infrastructure.
Wednesday’s trading halt has left several market participants in huge financial losses.
Last year, the Sebi had imposed stricter surveillance measures to tackle market volatility amid the coronavirus pandemic from March 23 till June 25, 2020. Besides, ensuring orderly trading and settlement, these steps were aimed at effective risk management, price discovery and maintenance market integrity.
NSE's average daily turnover has shot up sharply from Rs 47,917 crore in March 2020 to Rs 75,898.93 crore on February 23, just a day before the technical glitch and had crossed Rs 1 lakh crore on February 2, 2021 a day after the Union Budget while it was higher on the Union Budget day too at Rs 87,599.7 crore.
In the last trading session of this month i.e, February 26, NSE's turnover was the highest in recent times at over Rs 1.15 lakh crore.
"NSE is the largest derivatives exchange in the world by volume. Equity and equity derivatives segments' daily average volumes have gone up by 122 per cent and 79 per cent respectively in 2021 compared to 2019. Average order messages per day have gone up by about 200 per cent during the period across all segments with a peak load of over 6.5 billion order messages in a day," the NSE said after the February 24 trading halt.
Sebi needs to develop a real-time surveillance mechanism, to allow the market regulator to intervene even in the mid-market hours. Currently, Sebi largely relies on the data sent by stock exchanges after trading ends, said a report.