If the NSE is hit by a technical glitch and is forced to shut down the tradings for the day, the traders will not be able to exit out of their trades. In this scenario,
Can the exchange levy insufficient overnight margin penalty( if applicable) on all those “intraday” positions in equity and F&O?
Market can, in theory, gap up or down the next day, will the exchange compensate the traders who could not exit the previous day and may have suffered a blow due to overnight gap? Or the onus is always on the traders irrespective of whose fault it might be?
NSE has a disaster management site at Chennai. So if something happens to Mumbai, Chennai should go up. But assuming this is one of those days when shit hits the fan and exchange is down for the entire day,
Yes, they will charge short margin penalty.
They won’t make up for those losses.
Do you remember the 2010 flash crash in the US. Billions of dollars was lost due to a technical glitch, no losses were made good of.
As a trader you need to always factor in this risk when trading the markets. Hence it is always wise to be as conservative as possible when trading with leverage. This could happen to the exchange, to your broker, or even suddenly a situation where trader has no connectivity (no internet or phone in times of natural disaster).
Hence as a trader it is important to remember to do whatever possible to ensure that no one incident can take you out of the game.
On 3rd July, 2017 there was an instance of a third party data error which set an undetermined number of tech companies listed on the Nasdaq exchange to a share price of $123.47.
As a result, Amazon went down 87 percent, and Zygna was up 3,292 percent. Traders and investors alike were all affected by the glitch and had to wait for it to be fixed.
More on this data glitch in this Verge article.
