NSE chairman Ashok Chawla's letter to staff flags technical glitch, ongoing probe

NSE Chairman Ashok Chawla on Tuesday in a letter to the employees highlighted the fact that the exchange is going through tough times and resolved to deal with legacy technology issues and organisational stress.

This was seen as a reference to the exit of senior executives amid the ongoing investigation into the high frequency trading through its co-location facility. His letter also mentions the technical snag which forced the stock exchange to halt trading for over three hours on Monday.

The break down has come at a time when the bourse is going for its IPO and is expected to put its best foot forward.

Chawla letter states: "Yesterday's technical glitch is, proverbially speaking, one more straw on the camel's back. While such a situation is a Black Swan event, it unfortunately puts the NSE in the spotlight for the wrong reasons."

However, he said that the glitch was handled effectively which is indeed the NSE's responsibility as the largest exchange. Noting that fiscal 2016-17 was a year of many highs and lows, Chawla said the exchange did well financially and maintained robust market presence.

At the same time, it has been a period of challenges -challenges on the organisational front, stress over the legacy technology issues, reenergising of relations with   stakeholders across the spectrum from the regulator to shareholders, he said.

Last month, vice-chairman Ravi Narain had resigned amid regulators intensifying their investigation into alleged lapses in high-frequency trading offered through the exchange's 'co-location' facility.

The role of some top officials including Narain, who had also served as CEO of the bourse, is being looked into by markets regulator Sebi. In December last year, Chitra Ramkrishna had quit as Managing Director and CEO of the exchange. Narain along with Chitra and 12 other persons had been served with show-cause notices by market regulator SEBI on the 'co-location' matter.

The co-location issue relates to brokers placing their servers at the exchange's premises during 2011-14, which reduces the time for an order and provides a speed advantage over those located away from the premises. Faster access to data feed of an exchange, even by a split second, can result in huge gains. Narain was serving as nonexecutive Vice-Chairman and shareholder director of the bourse since March-end 2013.

Prior to this, he was Managing Director and CEO of NSE for nearly 13 years. "Today I am writing to convey that we are no doubt passing through difficult times but that we shall overcome," Chawla said.

The capability and professionalism of the NSE's human capital is well known, he said, adding that he has been fortunate to have seen it from close quarters. ... in this time of organisational stress, let us resolve to treat the challenge as opportunity. Let us work as a family to once again show that it is not for nothing that the NSE has become a world-class institution in a short span of 25 years, the letter adds.