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    Nifty crash case: Sebi censures NSE; orders independent review

    Synopsis

    On receipt of the report of the consultant, NSE has been asked, within a period of 3 months thereafter, to submit a report to Sebi.

    ET Bureau
    MUMBAI: Securities and Exchange Board of India has censured the National Stock Exchange, holding it responsible for not taking enough steps to avert the ‘flash crash’ on October 5, 2012. On this day, a trade led to a 900-point dive inss the Nifty in two minutes, resulting in the index hitting the lower circuit filter.

    Sebi, in an order late on Friday, said NSE had not adhered to the rules on circuit filters in this incident and did not effectively ensure that its stock brokers have necessary risk controls.

    Directing NSE to take a comprehensive review of its system, Sebi’s whole-time member Prashant Saran, in the 40-page order, said, “I observe that the system followed by NSE is not robust. Wrong action on the part of one individual could result in bringing the entire system to a halt... Therefore, it needs an indepth analysis as how the systems could be made more robust so that mistakes on the part of one or two persons do not bring the entire system to a halt.”

    Sebi rules require bourses to shut trading for two hours if the benchmark indices hit 10% in a single day. NSE had shut the equity segment for only 15 minutes on October 5 and did not shut down the equity derivatives segment.

    Sebi has directed NSE to carry out a comprehensive review by an independent expert of the processes followed, checks in place, systems employed by NSE. “The consultant shall suggest a more robust securities trading system and submit its report within a period of three months from the date of this order,” it said.



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    (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2024 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
    The Economic Times

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