On April 12th, 2018, around 12:12 PM, Zerodha experienced a connectivity issue when a primary leased line connecting their setup to the National Stock Exchange (NSE) via one of their CTCLs failed. The system automatically switched to the backup leased line, but this line subsequently became unstable, “flapping” multiple times over the next 60 minutes.

During this hour-long period of intermittent connectivity, orders routed through the affected CTCL were not successfully placed on the exchanges. This led to orders showing statuses such as “open pending,” “validation pending,” and “modify pending.” The issue particularly impacted bracket and cover orders (BO, CO), where counter-leg square-off orders failed to place, resulting in “hanging” positions that could not be exited normally.

Less than 0.3% of total orders and approximately 1.5% of clients who traded that day were affected. The root cause was identified as the poor reliability of the leased line connectivity provided by an exchange-approved vendor in India. Zerodha stated that they have no control over the fundamental reliability of these lines, despite significant investments in their own infrastructure.

To mitigate the immediate impact, Zerodha completely shut down the problematic CTCL, preventing new orders from being affected, and reconciled existing pending orders.

For future occurrences, Zerodha announced a release by the end of the month to allow clients to exit bracket and cover order positions directly from the open position, even if counter-leg orders are not visible. They continue to seek ways to improve the system within their control, acknowledging the limitations imposed by external leased line reliability.