India’s NSE forced to halt trading after index plunge
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
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.