In the face of severe criticism over Wednesday’s four-hour-long trading halt, the National Stock Exchange said on Friday that it ‘sincerely regrets the incident.
At a time when questions are being raised as to why the disaster recovery site did not come to the rescue during the incident, the NSE said that it took the decision of not migrating to the recovery platform after detailed consultation and evaluation.
Capital market regulator SEBI, which has sought a detailed root cause analysis from the exchange, has also asked the NSE to explain the reason for not migrating to the recovery site.
In a statement on Friday, the exchange stressed on its commitment towards providing a robust, stable and reliable platform and outlined its investments made towards in the strengthening of the platform.
“NSE has a robust, resilient, secure and fault tolerant technology infrastructure supported by best-in-class equipment from vendors like Cisco, HP, Dell, Hitachi, Checkpoint, Palo Alto, Oracle etc., aided by able technology service providers like TCS, Cognizant, Wipro etc.,” it said.
Further, the bourse added that it has a strong technology governance process in place wherein the technology infrastructure is reviewed on a regular basis by committees such as the standing committee on technology, which has technology experts. Also, multiple types of audits are carried out by various firms and institutions with specialised expertise, it said.
The NSE mentioned that it invests heavily in its technology infrastructure on a continuous basis and over the last 3-4 years, it has almost tripled its annual cash spend on capital and operational expenses on technology to around Rs 900 crore with a strong technology workforce of around more than 1,500 people, including employees and vendor staff.
Noting that it is the largest derivatives exchange in the world by volumes, it said that NSE has “demonstrated track record of handling significantly high volumes despite a challenging external environment over the last one year due to the pandemic without any impact on trading”.
Stating that the exchange constantly endeavours to provide a glitch-free environment, it said that the complex technology architecture, however, has significant external and vendor dependencies in terms of connectivity and hardware.
It cited examples of similar outages in Australia, New Zealand, Japan, Germany and the UK, which occurred in the past two years.
It said that post the shutdown of trading on NSE, the exchange considered all the “available alternatives on hand, including invocation of disaster recover site to decide on the course of action that would bring up the market at the earliest with least disruption to market participants and post evaluation, a decision was taken to bring up the systems at the primary site”.
The statement further clarified that it takes steps for disaster recovery readiness in line with SEBI regulations wherein quarterly drills are conducted and live trading sessions from site are conducted twice a year.
It reiterated that it is awaiting detailed root cause analysis from its vendors regarding Wednesday’s incident.