CIO&Leader_July 2017 (1)

Insight
Atechnical glitch shut down India’s
largest stock exchange, the National
Stock Exchange, for more than three
hours on June 10, 2017 as the system
failed to boot in its opening time: 9
am. The cash and derivative transactions
were held up, though NSE
halted the futures and options (F&O)
operations too at around 10 am.
After two failed attempts at 10.45
am and 11.15 am, normal trading
could only be resumed at 12.30 pm.
This happened in a day where BSE
Sensex saw a record high and also
gained in volumes because many
traders switched to BSE because of
the NSE glitch.
This outage comes exactly three
years after the July 2014 outage
at Bombay Stock Exchange (BSE)
which had lasted for three hours.
The NSE outage impacted trading
for a longer period.
Two previous cases of trading
halts at BSE have been because of
connectivity issues. NSE too had
experienced a glitch in October 2012
but trading was impacted for less
than fifteen minutes.
In August 2013, the US bourse
NASDAQ, on which the NSE is
modeled, had stopped functioning
for more than three hours,
due to a glitch. Even the New York
Stock Exchange (NYSE), the largest
exchange in the world, had stopped
trading for almost four hours exactly
two years back, on 9 July 2015.
“The matter is being examined by
the internal technical team and external
vendors, to analyze and identify
the cause which led to the issue and
to suggest solutions to prevent recurrence,”
NSE said in a press statement.
Lack of Backup?
Three hours is a very long time from
trading point of view and many traders
were unhappy that NSE did not
switch to a backup system.
NSE has been quoted as saying that
it did not invoke its Business Continuity
Plan (BCP) because the plan
was meant to provide continuity in
case of natural disasters, hardware
failures and connectivity-related
issues only.
The stock exchange regulator, Securities
and Exchange Board of India
(SEBI), which was directed by the
Indian Ministry of Finance to investigate
the issue and submit a report by
the day end, clarified that the glitch
was a software issue.
This outage comes exactly three
years after the July 2014 outage
at Bombay Stock Exchange (BSE)
which had lasted for three hours.
The NSE outage impacted
trading for a longer period
“On preliminary analysis, the technical
problem apparently is related to
software,” SEBI said in a statement.
The regulator also ruled out the possibility
of cyber attacks. “It does not
seem to be related to any cyber security
related compromise,” it clarified
in the same statement.
SEBI has directed NSE to submit
a detailed report on the matter. The
regulator has also asked NSE to have
a review of their Business Continuity
Plans and to submit a detailed plan
as to what measures are going to be
taken to avoid such recurrences.
What to make out of the
glitch?
At the lack of any detailed public
report, it is difficult to analyze what
caused the delay. However, based on
the information known so far, certain
things are clear.
1. It was not a cyber attack; it was a
system error
2. NSE did not switch to its BCP
because that was reserved for
natural disasters or hardware failures,
meaning it has not taken into
account situations like this where
the business continuity was severely
compromised, for its BCP
This just means that even for mission
critical applications such as stock
market trading, there is serious gap in
business continuity planning. In the
last few months, a series of outages in
airlines, such as Delta, United and British
Airways had brought into limelight
the gaps that remain in the resilience
plans of these airlines, the NSE outage
has once again highlighted that issue.
In none of these cases, any external
attack was involved.
While a stock market outage may
not have seen as much social media
outrage as an Airlines outage, the
potential impact in business terms
could be much bigger.
Are we ignoring the basic reliability
and resilience plans while readying
ourselves for tackling possible
external actors?
July 2017 | CIO&LEADER
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