Post-mortem of technical issue – August 29, 2019

August 29, 2019
Trading @ Zerodha

Between 10.00 and 10.40 AM today, we faced technical issues with our order management system (OMS). Order placements resumed after that, but clients who had open orders from before 10.00 AM that got executed at the exchanges during the affected period, faced issues with additional margin blocks until we could reconcile the overall positions with the exchanges. We are extremely sorry about this. 

The root cause of the issue today was a freak incident that neither we, nor our OMS vendor, Refinitiv (formerly Thomson Reuters) a subsidiary of the London Stock Exchange, have encountered before. It is normal for a large single order to get executed in multiple trades at the exchanges, usually up to several hundred trades. But today, a single order for 10 lakh quantity placed at around 9.40 AM on a sub Rs 1 stock (penny stock) on BSE got executed in almost 1+ lakh individual trades. This is unprecedented and caused an overload in the OMS.

There is no way to predict or control how an order placed at the exchange is filled. It is a function of market liquidity. Refinitiv is working on a fix to the OMS to handle cases like this. Until then, we are limiting the maximum allowed quantity per order for equity trades to 20,000. If a client has to enter or exit larger quantities, it would have to be done in multiple orders of 20,000 quantity. We will soon launch basket orders on Kite to ensure it is not inconvenient to create multiple orders of 20,000 for a particular stock. This limit affects less than 0.02% of our clients.

Once again, we are extremely sorry about this. There are unforeseen edge cases and rare conditions like this that can affect any technology business. I have had many of our clients writing to me asking to increase the brokerage costs to ensure technical issues do not happen. I want to reassure you that technology and quality of our products are something that we never compromise on. Our low brokerage has no bearing on the quality of our technology, which every day, scales to serve millions of our clients place millions of trades.

Thank you for your continued support.

Nithin Kamath

CEO @ Zerodha and partnering startups through Rainmatter to help grow and improve the capital market ecosystem in India. Love playing poker, basketball, and guitar. @Nithin0dha on Twitter. “You don't have to be a hero to accomplish great things---to compete. You can just be an ordinary chap, sufficiently motivated to reach challenging goals.” - Edmund Hillary

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