13 Apr 2018, 01:48 PM

Postmortem: Trading and hanging orders on 12th April 2018


Yesterday, on the 12th April, one of the NSE leased line connections to our setup went down. This affected trading for a small group of our clients, resulting in hanging orders and positions.

We connect to the exchanges using multiple CTCL‘s. Each CTCL has a primary and backup leased line. We have multiple such CTCLs and two leased lines for each CTCL. All orders that come through our trading platforms get placed on the exchange through these CTCL’s in round robin.

Yesterday, around 12.12 pm, the primary leased line on one of our CTCLs went down. The backup leased line automatically went live. But the backup line also started going up and down (“flapping”), not once but multiple times over the next 60 minutes. Find below screenshot of one of the emails we received from the NSE approved leased line vendor, when this happened:

During this period when the lines were flapping orders going through this affected CTCL weren’t getting placed on the exchanges and hence the order status update  – open pending, validation pending, and modify pending.  We eventually shut this CTCL completely, so no new orders could get affected.

Once the CTCL was shut off, the orders which were showing any of the pending states were lapsed and reconciled with the exchange. This affected less than 0.3% of our orders yesterday and around 1.5% of our clients who traded yesterday. The issue when this happens though is with bracket and cover orders (BO, CO). In a bracket and cover order, there are counter leg square off orders which never gets placed when the primary orders are lapsed. What this means is a hanging BO/CO position which can’t be exited in the normal way. We advise clients to take opposite position using MIS/NRML when this happens if they intend to exit such hanging position.

What are we doing about this?

We have a new release by end of this month where bracket and cover orders will have an option to exit from open position itself. Currently the exit option shows up only on the counter leg open orders. So even if you don’t see a counter leg open order, you can exit the BO/CO position from admin position directly.

On the leased line connectivity side, unfortunately there is nothing we can do. We are allowed only one backup for every CTCL. It is heart wrenching when incidents like this happen which we have no control on. We have invested significant amounts of money to ensure upkeep of our connectivity, but leased line reliability in India, even from the exchange approved vendors, is extremely poor. At the scale of our business in terms of number of traders using us, these incidents snowball and hurt us more than others.

I apologise for the pain this incident has caused our affected clients. Unfortunately this wasn’t in our control. As we always have, we’re seeking ways to change how the system works for the betterment of our entire trading community.