Zerodha faces investor fury after stock exchange glitch

India's largest brokerage Zerodha is facing a backlash from traders who saw their equity positions abruptly closed during an exchange glitch, amidst criticism that a lack of communication from the country's top bourse caused losses.

The National Stock Exchange (NSE) suddenly shut down for nearly four hours on Wednesday, blindsiding traders. As the NSE did not swiftly update whether, and when, it would reopen, brokers began closing intra-day equity positions on another exchange later, leading to sharp losses for some investors.

Hundreds of traders who bought stocks via Zerodha, dubbed the Robinhood platform of India, voiced concern on Twitter, with many posting pictures showing portfolio losses due to trades squared off by the broker.

Many signed an online petition calling for strict action.

“My 6 months salary has gone...I'll sue you in court,” said Twitter user Aashish Kumar, who posted a snapshot of his Zerodha account showing a trading loss of 211,777 rupees ($2,922).

Other traditional brokerages that rely more on relationship managers and take trade orders from clients via telephone also resorted to similar risk mitigation strategies on Wednesday, traders said, but criticism of Zerodha was most vocal.

Zerodha revolutionized stock trading with its discounted offerings and easy-to-use smartphone apps in India. Today, it says it is the country's largest brokerage with more than 4 million clients, accounting for 15% of daily retail trading volume.

Zerodha declined to comment, while the NSE did not respond to a request for comment.