February 27 2020
Dubious orders cause trading crash on NSE
06 October 2012

Trading on National Stock Exchange (NSE) was disrupted in the early hours of trade following an erroneous trade by Emkay Global financial Services, which sent the 50-share Nifty into a free fall, triggering the intra-day circuit filter, which shuts down the trading system automatically when limits on either side (up or down) are breached.

“The market circuit filter got triggered due to entry of 59 erroneous orders which resulted in multiple trades for an aggregate value of over Rs.650 crore. These orders have been entered by a trading member, Emkay Global Financial Services, on behalf of an institutional client,” said NSE in a clarification.

These market orders have been entered for an erroneous quantity which resulted in executing trades at multiple price points across the entire order book, thereby causing the circuit filter to be triggered. These orders have been identified to a specific dealer terminal.

Emkay Global Financial Services has closed out the positions arising out of erroneous trades smoothly. The member has been disabled from trading.

The market opened normally on Friday, and the Nifty opened at 5,815. At 9.50.58, “Nifty circuit filter got triggered upon which the cash market was closed automatically. The Nifty fall was apparently on account of abnormal orders resulting in multiple trades at low prices.”

While the Exchange systems functioned normally without any glitch, the abnormal trades caused market closure automatically due to the index circuit filter getting triggered. The market was reopened by the Exchange with a pre-open phase at 10.00.22 and trading resumed at 10.05.00.“The market is functioning normally, and the incident is being investigated,” NSE added.

Sensex closes below 19,000

Te Nifty closed at 5746.95, down by 40.65 points or 0.70 per cent. On the Bombay Stock Exchange (BSE), the 30-share sensitive index (Sensex) closed below the 19,000-mark, at 18,938.46, down by 119.69 points or 0.63 per cent compared to previous close of 19,058.15. It touched a high of 19,137.29 and a low of 18,757.34.

“The undertone was cautious today, as the Indian markets had already reacted to the news of impending Cabinet nod for FDI in pension sector and increase in FDI limit in insurance,” said Amar Ambani, Head of Research, IIFL.

However, the undercurrent for the Indian equity remained positive in the wake of the Government's new-found zeal to introduce long-pending economic reforms. FII inflows continued unabated amid optimism that the slew of reforms unleashed by the Centre in recent days would push growth higher, he added.

“The next big trigger will be further monetary easing by the Reserve Bank of India. The upcoming earnings season will also have some bearing on sentiment, although markets will be more interested in the management commentary on the outlook going forward,” Mr. Ambani added.



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