Several clients of discount brokerage Shoonya were unable to execute their trades for large part of Thursday (13th April, 2023) as the broker’s website faced technical glitch.
Viraj Shah (name changed), logged in to the market yesterday (13th April, Thursday), hopeful for a successful expiry. He has been dealing in the stock market for over a decade.
Viraj was confident of using his time-tested winning strategy and being in profit. He has been using the Shoonya trading platform from Finvasia, a global financial services company.
He had a capital of around NR 3,40,000 and had adequately covered his risks.
The market opened at 9: 15 AM.
Around 9:35 AM, Viraj realised that the trading terminal was not punching the right orders. At 10.00 AM, he started panicking and suddenly found that he could not login to his account.
The day proceeded with frantic calls to Finvasia customer support. Unfortunately the Finvasia team was not accessible to support Viraj.
When Viraj was finally able to login, he was shocked to find a loss of INR 2,91,578 with around 85% of his capital gone. Weird orders were punched in, which was against the margin rules, and he could not square off his trades yesterday. (See screenshot).
Despite repeated calls to Shoonya and trying to close the orders, he was unable to do so. As the markets closed at 3.30 PM yesterday, Viraj is still carrying a loss of INR 2,91,578.
This is just one story of Viraj. Many such instances sprang up yesterday of customers who faced huge losses due to a technical glitch at Shoonya from Finvasia.
Traders could not square off their positions in time, leading to financial losses. They were also forced to take physical delivery of shares in some trades.
“Margin blocked is also my issue…hence not able to take any new trade or square off already open order,” wrote one Shoonya trader.
” @NSEIndia @SEBI_India @ShoonyaApp. no relief yet. Unwanted huge losses due to broker’s fault. Higher authorities please help get a refund , ” wrote Rishi Chandnani on Twitter.
This is what Sarvjeet Singh Virk, Managing Director & Co-Founder Finvasia wrote:
Dear Customer,
We would like to humbly thank you for your patience today; while Shoonya faced a technical glitch that impacted our clients. This happened to the clients who placed a trade between 9 am and 11 am. We feel, as we grow, our responsibilities grow with it, and we did not take this glitch lightly. The problem is now fully resolved, and we will be working hard to ensure that it doesn’t happen again.
Shoonya is first and foremost an engineering enterprise and we are fully aware that no system is 100% fool proof. Our systems have been fairly stable over the last 15 years, and this was the first event of its kind that we encountered.
To explain our users in detail as to what transpired please see further details below:
What went wrong today?
Technical Error
Our systems encountered a technical error when the markets opened today. To resolve the same, they were rebooted. This is BAU or business-as-usual protocol. Once this is done, usually the systems sync with the exchange servers automatically for normal operations to resume. However, the technical issue persisted during the initial trading hours from 9 AM to 11 AM.
What did this result in?
As a result of the technical issue, customers who placed trades between 9 AM to11 AM couldn’t see the correct positions at the front-end of the platform.
More importantly, this caused a front-end mismatch of trades in individual client accounts. However, the issue was only with the front end and not the back end. The trades were executed in the correct trading accounts with the exchanges.
Trades placed after 11 AM did not experience any glitches at the backend.
What happens next?
Receipt of contract notes:
We have ensured that you receive your respective ‘Contract Note’ by the end of the day. Please check your Contract note and take note of open positions in it.
Closure of discrepancies:
If in case you find any discrepant trades in your contract note, which are not initiated by you, you are advised to close / square them off before 9:30 AM on Monday, 17th April 2023.
Any positions open after 9:30 am, Monday, 17 April 2023, will be considered as a transaction of your choice (undisputed), and will not be considered for further action.
Submit your dispute case:
Once you have squared-off your trades from your account before 9:30 AM on Monday, 17th April 2023, please raise a dispute case by sharing the details of discrepancies by writing to our Risk Management Department by sending an email on tradesettlement@shoonya.com
Review Process:
Once we receive your dispute case, our team will review it. You can be rest assured that we will reach a mutually amicable solution.
We would like to assure you that we have mitigated the situation currently. In accordance with regulatory guidelines, we are putting processes in place to ensure that such a situation does not arise in future.
We sincerely apologize for the inconvenience caused to you, and deeply regret the same. We want to reiterate that we are here to serve you the best.
Best Regards,
Sarvjeet Singh Virk
Managing Director & Co-Founder
According to Gagan Singla, MD for blinkX, an initiative by JM Financial, today’s trading landscape demands traders to be equipped with the best technology and customer management services. “Most tech-led companies leave end customers feeling lost and confused in the name of automated services and solutions. While technology certainly offers a huge service experience, people take comfort in people. Hence, in addition to robust technology, a dedicated customer experience team that offers a human interface to the customers is also required,” he says.
Considering the growing number of such incidents, the Securities and Exchange Board of India (SEBI) came up with a circular last year to address the issue of technical glitches in stock brokers’ electronic trading systems. It released a framework to ensure that brokers have adequate controls in place to manage and mitigate the impact of technical glitches. As per SEBI, some of the reporting requirements include:
- Stock brokers shall inform the stock exchanges about the technical glitch immediately but not later than 1 hour from the time of occurrence of the glitch. (Did this reporting happen in this scenario?)
- Stock brokers shall submit a Preliminary Incident Report to the Exchange within T+1 day of the incident (T being the date of the incident). The report shall include the date and time of the incident, the details of the incident, the effect of the incident, and the immediate action taken to rectify the problem. (This should be awaited now).
- “Stock exchanges shall put in place a structure of financial disincentives applicable to stock brokers for technical glitches occurring in their trading systems and non-compliance of the provisions made in this regard,” SEBI said.
“Tech glitches” over the years: Time to act
On Aug 29, 2019, several clients of discount brokerage Zerodha were unable to execute their trades, as the broker’s website faced a technical glitch.
On 24 June 2020, users of HDFC Securities and Sharekhan faced issues during trading hours. The companies said that a technical glitch led to this scenario.
On 1st February, 2021, brokerage platform Upstox faced a massive technical glitch leading to several investors suffering serious losses after they were unable to square up positions.
On January 13, 2022, users of the Groww app platform complained about glitches as they were not able to login to their accounts
On November 22, 2022, Zerodha was hit by yet another outage as users reported issues with trading via the app and accessing the website.
On December 5, 2022, many investors and traders complained about technical glitches while using the Kotak Neo app as they could not place orders, or square off their positions.
