NSE’s special Live Trading Session on 20 January, 2024

Introduction

The National Stock Exchange of India (NSE) has issued a circular dated December 28, 2023, announcing a special live trading session scheduled for Saturday, January 20, 2024. This unique session involves an intraday switchover to the Disaster Recovery (DR) site and aims to evaluate the readiness of market participants to handle unforeseen events and restore operations swiftly.

Purpose of the Live Trading Session

The primary objective of this special live trading session is to assess the preparedness of market participants in the face of unexpected events. It serves as a critical measure to ensure the seamless transition of operations from the Primary site to the DR site, a crucial element in maintaining business continuity during crises. This precautionary step is similar to having a Plan B in place, ensuring that essential systems are available to fall back on in case of a disaster at the original business site.

Distinguishing Features: Mock Session vs. Special Trading Session

One key aspect that sets this special trading session apart is the real nature of the trades conducted, in contrast to a mock session where trades are simulated. This distinction is vital as it allows for the testing of real-world scenarios, ensuring that market participants and approved algorithmic trading strategies/systems are functioning optimally.

Mandatory Participation and Testing

SEBI has made it mandatory for all stockbrokers to participate in and test their approved algorithmic trading strategies in these special sessions. This regulatory requirement emphasizes the importance of ensuring that all systems are thoroughly vetted and ready for deployment under challenging circumstances.

Trading Timings

The Capital Market Segment will witness two distinct trading sessions during this special event. The first session, held at the Primary site, will span from 8:45 AM to 10:00 AM. Subsequently, the second session, conducted at the DR site, will take place between 11:15 AM and 12:30 PM. Similarly, the Futures & Options (F&O) segment will follow a parallel structure, with the first session at the Primary site occurring from 9:15 AM to 10:00 AM, and the second session at the DR site scheduled from 11:30 AM to 12:30 PM. Specific timings for pre-open, normal market, call auction illiquid, and other segments are elucidated in the circular issued by NSE.

Price Bands

For the special trading session, price bands and daily price limits will undergo revision, with a uniform 5% price band applicable to all securities. In the case of futures contracts, the daily operating range will also be restricted to 5%. Notably, no flexing will be applicable during this session. It’s important to highlight that these revised price bands will revert back to normal from the subsequent trading day.

Important Instructions

Several crucial instructions have been outlined for market participants to ensure a smooth and secure transition during the special trading session:

Purging of Outstanding Orders: Before the switchover to the DR site, all outstanding orders will be purged, underscoring the necessity for members to manage their orders proactively.

NNF Software Users: Members utilizing NNF software are specifically advised to clear outstanding orders from session 1 in their systems before engaging in trading from the DR site. This precautionary step ensures the streamlined execution of trading strategies.

Connectivity Parameters: The circular emphasizes that connectivity parameters for both the Primary and DR sites remain unchanged. Leased line members are provided with specific IP addresses, and co-location facilities along with multicast tick-by-tick feed will be available.

Settlement Obligations: Trades executed during the special live trading session will result in settlement obligations. Members are urged to be attentive to communications from clearing corporations regarding these obligations.

Conclusion

In essence, the Saturday live trading session serves as a crucial step in maintaining the robustness of the financial markets. By simulating real-world scenarios and conducting trades in a controlled environment, market participants can ensure their readiness to handle unforeseen events. While the benefits may not be directly evident for retail clients, the overarching goal is to create a resilient and well-prepared market ecosystem that can navigate challenges effectively. This comprehensive preparation is akin to overhauling a car before a race, checking every component to ensure optimal performance on race day.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.