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Curious Case of Bombay Stock Exchange

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BSE (Bombay Stock Exchange), India’s second largest exchange suffered a technical snag. Trading at BSE was suspended for 3 hours and 3 minutes. This comes as a major to blow to BSE, who is trying to regain its lost market share from NSE. Will the recent developments put BSE a distant second to NSE?

Although trading halts at exchanges are not totally unheard of in the industry; In November 2009 LSE (London Stock Exchange) suffered a technical snag, which affected trading for more than 3 hours and in August 2013 NASDAQ was shut down for 3 hours due to a connectivity issue. But the case of BSE is baffling since this is the 4th such instance in the last 4 months! The recent one being the biggest of them all.

Since the introduction of derivatives in the Indian market, BSE has been steady losing out its market share to NSE and lot of derivatives traders prefer NSE. However, many traders who trade in equity continue using BSE. However, such frequent snags will offer them a reason to shift. Yesterday for most traders especially day traders, NSE came to their rescue.

The proof seems to be in the pudding for the brokerage industry too. Many brokerages that have launched their new trading systems this year seem to prefer NSE, which can be seen in the order entry panels. NSE appears ahead of BSE or in some systems, the order entry opens with the default option as NSE.

As mentioned earlier, in the trading world, technical snags at exchanges may not be a new issue for traders and brokerages. They will accept the snags and move on. But the frequency of such occurrence bothers everyone. BSE need not tread a new path to avoid such issues in the future, rather it can pull a leaf out of LSE’s or NASDAQ’s or even NSE’s book, who seem to have averted such repeat occurrences successfully.

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