An Indian financial service company and retail broker -- Zerodha -- faced a technical issue on Thursday, August 29, due to which its customers lost money and were unable to execute trades.
The futures and options (F&O) traders were left in shock, as they were not able to trade for nearly 40 minutes on the F&O expiry day. Many of the traders have suffered badly as they had lakhs of rupees mark-to-market (MTM) loss.
Zerodha tweeted about the issue from their official handle saying that they are experiencing difficulties placing orders with its Order Management System (OMS) and that they are investigating the issue.
However, Zerodha has resolved the technical issue and has alerted its users. But the brokerage platform has temporarily blocked fresh bracket/cover orders, according to a separate alert issued at 10.46 am. It instead recommended customers to use CNC/MIS/NRML order type instead, reports CNBC.
Zerodha responded to the issue stating that the root cause of the issue was a freak incident that neither the firm nor its OMS vendor, Refinitiv (formerly Thomson Reuters) a subsidiary of the London Stock Exchange, have encountered before. "It is normal for a large single order to get executed in multiple trades at the exchanges, usually up to several hundred trades. But today, a single order for 10 lakh quantity placed at around 9.40 AM on a sub Rs 1 stock (penny stock) on BSE got executed in almost 1+ lakh individual trades. This is unprecedented and caused an overload in the OMS," read the statement.
According to the NSE data, the firm had over 9 lakh active clients as of July 2019 and is the market leader as it offers the lowest brokerage in India due to which it gained a significant trading volume over the years.
The displeased customers of the firm took it to social media asking Securities and Exchange Board of India (SEBI) to penalise Zerodha for their bad services, which led to the loss of many traders. This is not the first time Zerodha customers are facing such technical issues, on February 27, several traders using it faced technical issues while using Kite platform.