Explained: Unnecessary delay in resolution of technical snag leads to disincentives, penalty for exchanges

In the backdrop of a technical glitch at MCX that delayed the onset of the morning session at the commodity bourse by four-odd hours on Tuesday, February 13, here’s a lowdown on what capital market regulator Sebi’s rules hold for the exchanges: Also read: MCX technical glitch: Trading commences on MCX at 1 pm after four-hour delay

--Any technical snag has to be notified to the market watchdog within two hours of occurrence.  The regulatory has to be provided with a preliminary report within a day’s time after the glitch.

--The information has to be furnished by the impacted exchange on SEBI’s e-mail address, techglitch@sebi.gov.in. 

--The exchange is mandated to send a route cause analysis (RCA) report to the regulator; Sebi forwards this report to its technical advisory committee (TAC)

--A delay in the release of the RCA report attracts a penalty of Rs 1 lakh per day for the exchange

--Corrective measures are suggested in case the issue or disruption is not resolved as per the guidelines

--Failure to implement corrective measures leads to other disincentives, including penalties for the exchange, its MD and CEO, and its CTO

What caused the technical glitch at MCX on February 13?

Commodity exchange MCX said the delayed start to the session was on account of the slow processing and generation of backend files for members, after trading at the bourse commenced at 1 pm, instead of the normal 9 am.

Between 9 am and 1 pm, MCX notified participants about the delay on its website, mcxindia.com: “Members are requested to note that the start of the market has been delayed and (the) revised market start time will be 1:00 pm today.”

Meanwhile, microblogging website X (formerly Twitter) was abuzz with a host of tweets describing the situation as participants awaited the return of normalcy in operations on the exchange.  

Due to operational delays at the Multi Commodity Exchange (MCX), the commodity markets will open at 10 AM today.

— Zerodha (@zerodhaonline) February 13, 2024

How bad was the MCX technical glitch?

The technical glitch took away half of the first session of the two daily sessions on the commodity exchange.

"The margin file has not been created yet. This file, containing essential details such as client margins and positions, is usually available at around 6-7 am every day... All members are facing the issue," Narinder Wadhwa, President of the Commodity Participants Association of India (CPAI), told Zee Business.

"These are day-end files that are usually uploaded normally. While today's glitch seems to be a major one, MCX has said that it has distributed the files to half of the members... Earlier, there have been 2-3 instances of delays since the software transition," Wadhwa explained.

MCX trading hours

MCX conducts trading in two sessions: from 9 am to 5 pm (morning session) and from 5 pm to 11:30/11:55 pm (evening session). 

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