08 Jul 2023, 03:56 PM

Update on BSE F&O orders issue on 07 July 2023

When you place an order on Kite web or mobile, this is what happens in the background.

  1. When you place an order, we first validate it for parameters such as circuit limit, tick size, etc. If the order doesn’t meet any of the parameters, then the order is rejected, and the reason is shown on Kite.
  2. After this, the validated orders hit the order management (OMS) and risk management (RMS) systems that are connected to the exchanges. We have multiple setups of this system in different data centers, where we have distributed clients to reduce points of failure and also as backups. We have these setups in Mumbai and Chennai to reduce the probability of all users being affected at the same time.
  3. The order is then validated for all RMS checks, such as margins, holdings, etc., and sent to the exchange via a physical leased line to various exchanges (NSE, BSE, MCX). Leased lines are provided by internet service providers such as Airtel, TCL, Sify, etc. For each of these leased lines, we have a backup line in case the primary line goes down.

What happened yesterday with BSE F&O orders?

BSE leased lines in two of our setups went down. The lines were switched to the backup line, but for the orders that passed through during the time the leased line went down, the order status was unknown. Clients would have seen the order as Open pending, Cancel pending, or Modify pending in their order book. We posted an update on our bulletin and shared a preliminary root cause analysis (RCA) on our disclosures page.

What do these order statuses mean?

  1. OPEN PENDING: The orders have been sent to the exchange through the physical leased lines.
  2. MODIFY PENDING: The modification requests for open positions have been sent to the exchange through the physical leased lines.
  3. CANCEL PENDING: The order cancellation requests have been sent to the exchange through the physical leased lines.

The orders in these states have to be reconciled with the exchange once the lines are back online so that the actual state can be updated. At that point, we wouldn’t know if the order actually reached the exchange and was executed. Once the reconciliation is done, the actual state is updated. Yesterday, however, during the time the reconciliation was on, we found multiple disconnections of the leased lines in these setups. It wasn’t just us, other brokers offering BSE F&O reported having the same issue. We are talking to OmneNEST (earlier Refinitiv, our exchange empanelled OMS and RMS vendor), the internet service providers (ISPs) and the exchange to ascertain the root cause of the disconnection.

Why were the timestamps for these orders updated after the markets closed?

The reconciliation process for the affected orders was completed after the markets closed between 3.30 PM and 3.45 PM. The timestamp you see reflects the time at which the reconciliation of the order was completed. If you check the order details, you will find details of the trade execution time. This doesn’t mean that new orders or duplicate orders were placed. These were the same orders placed by the users that were affected during the period when our leased lines faced issues.

We will update this bulletin once we have updates from the ISPs and the exchanges.

As a broker, we are the only entity you interact with when you trade with us. But in the background, we are connected to and rely on internet service providers, order management vendors, exchanges, clearing corporations, depositories, and banks. While we make every effort to reduce the odds of issues occurring at our end, we unfortunately are powerless when it comes to issues at any of these entities. We aren’t saying this as an excuse but just to highlight the risky nature of capital markets. We sincerely apologize for the issue yesterday.

Please create a ticket if you faced an issue yesterday. We are looking into the issues on a case by case basis and considering refunds.