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CSE's online snag causes concern among Net-based traders

Zakya Mariam in Calcutta

Brokers at Calcutta Stock Exchange are yet to recover from the losses they suffered following a snag in the online trading system on May 12.

The systems failure has evoked sharp criticism from leading stockbrokers in Calcutta. Questions are being asked about the Indian bourses' fitness for Net-based transactions.

The snag occured during the post-closing session on May 12, and is believed to have caused huge losses to traders even though only 15 of them had placed bids for buying around 15,000 shares. Experts estimate the total loss suffered by these brokers at about Rs 2 million.

Traders are irate that the CSE officials have turned down their demand to declare the trading of the post-closing session on Friday as cancelled.

While CSE's president J M Chowdhury refused to comment on the row, executive director Tapas Dutta said that Computer Maintenance Corporation, the CSE's official vendor, had been asked to submit a detailed report explaining as to what led to the technical failure.

Dutta said that his first priority now was to find out those brokers who suffered losses.

"We haven't thought of either cancelling the bids or compensating the losses incurred. We are awaiting a report from the CMC. But all I can say is that the CSE was not responsible for the impasse. It was merely a technical failure which is being probed. But there is absolutely nothing to panic about since this is an isolated incident, the likes of which occured three years ago," he remarked.

Ravi Todi, president of the Merchant Chambers of Commerce, is not convinced. According to him, technical faults have become a regular feature at the CSE. If unchecked, they could lead to a catastrophe one day.

"The CSE has been using age-old software. This does not bode well for the market, which is already jittery at the moment. My contention is that if you can't keep pace with the changing times, you should do away with online transactions," said Todi.

However, the technical staff at the CSE refused to admit that they have been using outdated technologies. A Dasgupta, technical supervisor of the CSE, said, "One can't possibly prevent such incidents even with the most upgraded systems. This kind of faults are more frequent at the BSE than the CSE. The BSE systems sometimes remain non-functional throughout the day, whereas it was a short-duration snag at the CSE on May 12. I do not see any reason why we should blow a stray incident like that out of proportion."

While brokers claimed a "huge monetary loss", Dutta said the losses were ''significant''. "The losses incurred are not a huge quantum considering the average daily transactions at the CSE are worth Rs 1 billion."

The CMC authorities, for their part, do not believe the incident has cast a doubt on the safety of Net-based trading.

Surya Prakash Toshniwal was among the brokers who bid for purchasing during the post-closing session. He recalled that he had placed a bid to buy 1300 DSQ Software shares at Rs 621. Since his bid was not cancelled, he had to suffer a loss of about Rs 45,000 as the same share opened at Rs 590 on the subsequent day.

"Similarly, I had also made a bid to purchase 1000 Satyam Computers shares at Rs 2,754, which opened down by Rs 100 when the trading resumed on Monday. Now if the CSE bigwigs do not consider cancelling the bids, you can guage the magnitude of losses we will be suffering," Toshniwal said.

Many traders said it is almost impossible for the CSE to cancel the bids placed during the post-trading session on May 12.

Suresh Kumar Almal, a broker at the CSE, said, "The best way out is to ask the CMC to bear the losses since it was primarily the sole duty of its experts to ensure a trouble-free trading. Both the president and the executive director should exert pressure on the CMC to pay the compensation to affected brokers."

Software engineers have meanwhile begun rectifying the error. Dutta assured that software in the CSE's computer systems would be upgraded if necessary.

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