DSE under fire for repetition of technical glitches, trading halts

Infograph: TBS

Trading halt at the Dhaka Stock Exchange (DSE) for more than three hours on Monday appeared to further hurt the confidence of stock investors who were already in pain due to the market downturn.

Responding to investors' skepticism about the authenticity of the cited reason "technical glitch", and stakeholders' finger-pointing at the bourse's technological efficiency, the securities regulator, at the end of the day, formed an enquiry committee to find the facts.

The disruption

Starting the session at 9.30 am on Monday, DSEX, the broad-based index of the premier bourse, dropped by 0.52% at 10.58 am when the DSE halted its trading.

And, after a long 192 minutes of break, DSE trading resumed at 2.10 pm and ended at 2.30 pm, slashing the 260-minute session to 108 minutes that resulted in 57.5% decline in the daily turnover.

Meanwhile, the brokers of the Chittagong Stock Exchange (CSE) were executing their trades as usual.

A technical issue emerged and the teams of the DSE and the trading engine vendor NASDAQ together solved it sooner, said the DSE in a statement, regretting for the stakeholders' inconveniences.

This is not the first time the DSE halting trading due to technical glitches, while its smaller competitor Chittagong Stock Exchange (CSE) is yet to experience any.
Earlier on a bullish session of 18 July last year, user overload triggered a standstill of the DSE trading engine that resulted in a 111-minute halt.

On 19 March 2020, the bourse had to start trading at 2.00 pm for half an hour, instead of 11.00am as it was struggling to adjust the bottom circuit breaker that suddenly changed due the unforeseen imposition of the floor price for individual scrips in the evening.

Following the disruption last year the exchange increased its IT system capacity to match with the increased user load, according to the DSE Acting Managing Director (MD) M Shaifur Rahman Mazumdar.

But, the issue this time was not due to system capacity, he said citing the primary observation of his team.

"Technical mismatch with any of the brokers' self-hosted order management system (OMS) might have been the reason for the disruption in the trading platform."

"However, we are waiting for the technical report from NASDAQ that would clarify what went wrong, every single information is in the relevant log files," said the DSE Acting MD.

Technological capacity questioned

The repetition of technical issues and trading halt in two consecutive years sparked questions regarding the technological preparation of the country's oldest, largest and richest bourse.

"Technical issues might arise any time, but the delay in trade resumption is worrisome," said Richard D Rozario, the president of DSE Brokers' Association (DBA).

Repetition of technical glitch, trade halt for hours reflect the technological inefficiency of the bourse, he believes.

"Whatever happened, the stock exchange should have solved it in no delay," said the leader of the DSE brokers.

Unlike the 2021 disruption, the morning session was dull today (Monday) that saw much less trades than that on the recent peak days.

Shaifur Rahman Mazumdar told The Business Standard that the DSE and NASDAQ teams did not take much time to solve the problem, but the bourse had to move cautiously in restoring the information of the early-hour trades that had been executed already.

It was a mere technical problem that disrupted trading even at the worlds' most advanced and largest exchanges, he said.

The loophole

Another DSE official seeking anonymity said at the beginning of a working day, the system generates a session file, which acts as a temporary backbone of the session's data.

He suspects any of the stockbrokers' self-hosted OMS programme might have been updated recently and was not properly communicated with the DSE and the mismatch caused overload on the session file.

Only three of the several hundred DSE brokers nowadays are putting trade orders through their own OMS software, instead of using the basic one given by the DSE.

It is for the sake of modernising brokerage services and that began at the DSE following the IT-conservative bourse last year agreed to share the application programme interface (API) to let the broker-hosted OMS connect to its core trading engine.

The CSE shared its API with brokers in the mid-2010s, but it did not suffer any big disruption like the DSE, maybe due to the less order flow there.

However, it is apparent that the DSE needs a strong filter to protect its core trading engine from any outside malfunctioning factor to protect itself from any sabotage threat too.  

Rozario said any matching-mismatching between interconnected systems should be rigorously tested off-hours.

"We do not want our oldest bourse to be portrayed as a technologically weak or vulnerable platform," he said.

Mazumdar while talking to this reporter assured of no data loss, no intruding into its trading system and no non settlement of the trades that took place. 

The DSE in the mid-2010s bought its trading engine software from NASDAQ under a 10 year contract that is scheduled to end in December, 2024. NASDAQ is charging DSE Tk6-7 crore every year for the maintenance services.

Meanwhile, its Chinese strategic partner, the consortium of the bourses of Shenzhen and Shanghai, offered it's a free trading engine software alongside free maintenance for a decade.

BSEC ordered the enquiry committee to report within 30 working days.

DSEX falls 0.57% ultimately

Many people on the street on Monday were found to be skeptical of the cited reason "technical glitch" as they suspected if the trading halt was any tricky move to avert selling pressure in the market.

However, DSEX, the broad-based index of the Dhaka Stock Exchange (DSE) closed 0.57% lower at 6,307.95, in continuation of the ongoing downturn in the market.

DSE registered Tk334.7 crore turnover on Monday, which was over Tk788 crore on Sunday.