India’s NSE forced to halt trading after index plunge

India’s National Stock Exchange was made to briefly halt trading today due to a series of erroneous orders entered on behalf of an institutional client.

India’s National Stock Exchange (NSE) was made to briefly halt trading today due to a series of erroneous orders entered on behalf of an institutional client.

At 09.50 India time, circuit breakers on the NSE were triggered by a sharp fall in the value of the Nifty index, which the bourse said was due to “abnormal orders resulting in multiple trades at low prices”.

The market restarted with a pre-open phase at 10.00, with continuous trading resuming at 10.05. The NSE said the incident stemmed from 59 erroneous orders with an aggregate value of Rs. 650 crores (US$126 million) that were entered by Emkay Global Financial Services for an institutional client.

“These non-algo 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,” said the NSE.

Emkay closed out the erroneous positions and was subsequently disabled from trading by the exchange.

The incident will raise yet more questions on the ability of markets to cope with erroneous trades and whether there are appropriate mechanisms to catch algo-based or fat finger errors before they hit the market.

Earlier this week, trades in US-listed Kraft had to be cancelled across six exchanges after a broker error caused its price to surge by over 25% in a matter of seconds. The error occurred just one day after Kraft switched its listing from the New York Stock Exchange to Nasdaq OMX.

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