In the last 30 days, Zerodha faced 2 problems (22 nov and today), where some users were unable to place orders correctly.
I faced the issue on 22 nov first hand, but not today. Luckily both times, I did not had to bear any loss. But What if a similar bug happen just 15 minutes before market close? We won’t be able to square off MIS postions, this will lead to short delivery, and we can face risk of next day trading price change + 20% more?
Just wanted to know, If something like this happen, can Zerodha request exchange to provide a solution or something? What will happen?
It has happened in March 2020 during the Covid crash. The terminal stopped responding around 3:10pm and the MIS positions could not be squared off before the market closed. We had to carry our open F&O positions overnight.
I didn’t have any equity positions but I believe your assessment is correct. The short positions may be short delivered and would go for auction. The long equity positions would be okay because you could exit it the next morning.
On 24th February, 2021, NSE had stopped working for the entire day. The exchange decided to hold a special session post 3:30pm after rectifying the technical glitch.
But, in case of a glitch on the broker’s side, it’s unlikely that there would be any chance of redemption.
I think we should consider this possibility in the trades we take, and be prepared for a loss outcome, maximum loss possible outcome.
If a broker has a technical problem, what should the exchanges or regulatory do? Maybe the broker can take the fiscal responsibility, compensate the users but even if this is technically possible, it will not be done because some traders may wait for the last few seconds to close their positions, so should we separate them?
Were you properly hedged? Did Zerodha give any compensation for the broker bug? During covid crash overnight unhedged or far otm hedged shorts would have lost a lot of money then. That’s scary.
I did lose some money the next day, around 3% if i remember correctly. But, more than that, the glitch completely screwed up my mind and led to a series of losses in the coming days.
Obviously, no compensation was given. All brokers have an ironclad terms and conditions sheet which absolves them of any responsibility. Though, they still have to report to the exchanges about what went wrong.
