Zerodha says 'considering refunds' amid outrage over tech glitch during Sensex option trades

Leading stock broker Zerodha on Saturday said that they are "considering refunds" and looking into the issue on a case by case basis, after several traders were unable to exit their Sensex option trades on Friday.

The Nithin Kamath-led company acknowledged the interconnected nature of their operations and the potential risks involved when relying on various entities within the capital markets. While Zerodha is the primary point of contact for traders, they emphasised their dependence on internet service providers, order management vendors, exchanges, clearing corporations, depositories, and banks in the background

“While we make every effort to reduce the odds of issues occurring at our end, we unfortunately are powerless when it comes to issues at any of these entities. We aren’t saying this as an excuse but just to highlight the risky nature of capital markets. We sincerely apologize for the issue yesterday,” the company said in a press release.

The low-cost brokerage experienced an interruption in BSE leased lines at two of their setups, resulting in temporary service disruption. While the backup lines were promptly activated, there were instances where orders placed during the downtime reflected an unknown status, appearing as Open pending, Cancel pending, or Modify pending in clients' order books, said Zerodha.

To keep users informed, Zerodha issued a bulletin update and shared a preliminary root cause analysis (RCA) on their disclosures page, addressing the incident and its underlying causes.

Zerodha’s likely move to offer refunds has a recent precedent in the form of Shoonya offering Rs 3.5 crore compensation to the traders on its platform in a similar incident back in April. 

Zero-commission trading platform Shoonya faced a series of technical glitches in April 2023, leading to the emergence of ghost orders that caused financial losses for traders and hindered their ability to close their positions.

Later, Shoonya offered a compensation of Rs 3.5 crore to around 700 traders who suffered losses due to the glitch. 

The platform is backed by Finvasia, a fintech company established in 2009 by Sarvjeet Singh Virk and Tajinder Singh.

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