Experts go down memory lane as exchanges take unprecedented step ahead of F&O expiry

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Markets re-opened for an extended trade post 3:30 pm on February 24 after a technical glitch on NSE led to a trading halt earlier in the day.

NSE in a statement had said that trading had been halted since 11:40 am due to technical issues with its telecom service providers.

“NSE has multiple telecom links with two service providers to ensure redundancy. We have received communication from both the telecom service providers that there are issues with their links due to which there is an impact on NSE system,” NSE said.

Traders were worried about their positions a day ahead of the monthly expiry of derivative contracts for February.

Clarity on the resumption of trade came around 3:25 pm when NSE announced resumption of trade at 3:45 pm.

“BSE equity and equity derivatives markets will remain open till 5 Pm today as decided jointly between exchanges today. All other markets timings will remain as normal,” BSE MD & CEO Ashish Chauhan told Money9.

Here’s what market experts had to say about the trading glitch today:

Basant Maheshwari  Buffett said let them close down the exchange for 10 years. And now we are just 1 hour into it. Hope @NSEIndia doesn’t take Buffett too seriously.

Shankar Sharma  I am remembering today the Russian market shutdowns in 1998: Russian authorities would wait for Europe to open, see if markets were Green, if yes, open Russia for trading. Else keep it shut. Today’s, Asia market action is ugly….

Ajay Bagga  Am sure a thought out solution will be brought out by the regulator and the exchanges on positions, rollovers, expiry and margins. We have to weather this crisis and move on. Many systemic insights from todays failure. What does not kill the markets, makes them stronger.

Anand James, Chief Market Strategist at Geojit Financial Services

“Expiry eve is a crucial day for expiry related trades as time decay sets in. As indices froze a little after 10 am, FNO trades that reference such benchmark indices also slowed down. With hardly an hour’s trade possible for such index-based traders the higher margins on F&O positions may have been a double whammy. Towards this end, BSE being open may not have been much solace, but certainly a backup avenue for cash traders. Fortunately, VIX had calmed down after Monday’s steep fall, and the extended session post 3. 45pm could help settle things. As of Tuesday, Nifty and Bank nifty rollovers were at 40.9 and 36.7 respectively, in line with what is usually seen on similar days of previous expiries.”

Nithin Kamath, founder & CEO, Zerodha

NSE & BSE to reopen for extended trading from 3.45 pm to 5pm. All F&O MIS positions will get squared off at 4.15 pm and all F&O CO positions will forcibly be squared off by 4pm.

Yash Gupta Equity Research Associate, Angel Broking

Almost the complete day has gone for option players due to some technical issues at National Stock Exchange (NSE) which is the biggest exchange in India.

So, in option price there is a major component of time value of money which is known as delta, as we have almost lost 1 day of trading so the time value of money for the day has been eroded from the options.

Some options will expire tomorrow on February 25, so this trading halt will be beneficial for option writers as time value of money will come down when every market opens.

On other hand this will be a disaster for the option buyer as their premium will come down significantly. We recommend retaining investors to be cautious as when the market will open they may be very volatile for some time.