CoWIN is on overdrive 💾

Tech isn't solving all the problems of a vaccine roll-out. Rather, it's manual registrations ftw

This is edition 233 of Beyond The First Order, a premium daily newsletter that demystifies the hidden models, incentives and consequences of the most significant events across India and Southeast Asia

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India’s vaccine rollout using its digital infrastructure has similarities to America’s US$44 million platform. Glitches.

Speaking of glitches, India’s National Stock Exchange had a major one last week. India’s regulator needs to pull up its socks and really do some regulating. 

India’s payments space is seeing alliances being forged for ‘payment domination’. For-profit this time. 

And over in Japan, South Korea is taking over the world of manga.

Two families, one vaccine

At 9 am, a man sat down at his desk to work. But before that, he just wanted to do a quick drive-by the CoWIN website—the Indian government’s official vaccine registration portal for the second wave of Covid vaccinations. He wanted to register his parents in Dehradun in the northern Indian state of Uttarakhand. How long could this possibly take?

At noon, this man was still staring at his screen, waiting for an OTP number to squeeze through the massive, churning wheels of CoWIN’s digital machinery. He wasn’t alone.

When the OTP did land, and the man was finally able to register his parents, he couldn’t find a single centre in his hometown of Dehradun to send his parents to. There was no availability till the end of March (dates beyond March weren’t showing up). It wasn’t clear if the listed healthcare facilities had vaccine doses or not. 

But on the flipside…

Manual vaccinations in the city of Gandhinagar, in Gujarat, seem to be working out well for senior citizens. A survey taken a few weeks ago had manually registered senior citizens, ward-wise, and informed them about their closest vaccination centre. The vaccination process was relatively painless and swift. The arrangements, according to senior citizens The Ken spoke with, were “very good”. 

The first day of vaccinating the general population throws up three clear trends:

  1. The one-nation, one-CoWIN-platform theory will be stretched to its maximum extent in the coming few weeks. CoWIN will need a significant ramp up as it is a single point of success/failure when it comes to an efficient registration process.
  2. Every single day’s delay puts pressure on the government’s attempt to tame Covid’s second surge. The quicker the virus is stopped through vaccinations, the better. But without individual states working out offline, manual plans to support a stretched online infrastructure, mass vaccination is going to be a slowly unfolding reality for younger Indians without comorbidities.
  3. The vaccination portal can’t become a point of difference between the tech haves and have-nots. The government has made provisions with those without smartphones to register physically at vaccination centres. Expanding on this method, with or without the software cooperating, is potentially going to be India’s middle ground.

But all of this could also have been avoided if the digital infrastructure had met the physical one in preparation for this massive roll-out. “What have they been doing for half a year, couldn’t they have pre-registered everyone before starting?” says the man mentioned above. He’s only going to try CoWIN after a few weeks from now, hoping there are still doses left for his parents. 

Glitchy stock exchanges

In BFO#199, we wrote that India’s capital market regulator, the Securities and Exchange Board of India (Sebi), wants to invite competition into the stock exchange business:

Now, NSE [National Stock Exchange] is the undisputed market leader, by a fair distance. But despite its tech chops, it has faced several technical glitches, causing unexpected market crashes and losses to investors. Then, there was the co-location scam, or giving priority seats to certain traders for access to faster data on the markets (read The Market Mafia by Palak Shah for some of the drama).

So, if NSE is the ambassador for Indian stock exchanges to the world, these things don’t look very pretty. Sebi needs to stoke the competition or at least let NSE know that it can’t be complacent about its numero uno position. Fair.

Well, last week NSE messed up again. And Sebi seems to have been complacent and maybe even complicit as well. Whichever the case, it’s definitely not good optics.

So what happened?

On 24 February, barely an hour into the stock market opening for the day, data from the NSE indices stopped being relayed to brokerages across the country. So the prices stayed static while its rival Bombay Stock Exchange (BSE) continued to function normally. Small glitch maybe? 

Anyway, NSE didn’t shut the market immediately. An hour and half passed, and at 11:40 am, NSE decided that it would have to shut the market. It couldn’t fix the problem. 

But during this time, it also seems like it decided communication wasn’t the best policy. It halted trading without prior warning to brokers or investors. It also chose not to go into its disaster recovery site.  The backup site is a replica of the primary site and is aimed at ensuring trading activity does not stop even if there is a technical glitch. 

So why didn’t it switch to the backup? There are no answers yet except for a defence of its tech prowess. 

On 24 February, NSE continued its policy of being incommunicado through the remainder of the day. 

Business Standard reported that a senior finance ministry official said: “We are looking at the severity of the issue and whether any consequential damage occurred due to this.”

Well, there were consequential damages. Primarily for India’s largest broker and its clients. 

The stock markets close at 3:30pm, so, if the exchange keeps its mouth shut (or Twitter feed quiet) even till 3:00pm, most sensible people will assume that the problem cannot be fixed for the day. 

So, at 2.30 pm, India’s largest broker Zerodha messaged its customers and said it would close (square-off in market parlance) any intraday equity positions that a client has taken that morning on NSE. An intraday position is when you buy or short-sell a stock with the intention of reversing it the same day when the tide is in your favour. Anyway, such positions are usually leveraged. Which means people bet on it without having all of the money required in their accounts. It’s a fairly risky thing if the tide turns against you. Even more so when you’re wrong-footed by a technical glitch. 

And at around 3.10 pm, Zerodha and other big brokers squared-off these types of positions to reduce risk for clients.

But it seems like NSE woke up from its slumber at 3:17 pm and abruptly informed everyone that the exchange was up and running. And to make up for it, there would be an extended trading session from 3.45 pm to 5 pm. These things don’t happen. At all.

A post by Zerodha on its blog says:

Looking back at today, if NSE had informed brokers of a potential reopening or extension of trading hours, at least by 3 PM, we, along with many other brokers would not have had to take risk mitigation measures and square off positions on BSE. Unfortunately, because there were no updates given to brokers, we had no other choice. The last minute notification of the trading extension at 3:17 PM came a little too late.

Squaring-off these positions by Zerodha caused losses for many investors. And with that came the volley of complaints against Zerodha’s actions. Zerodha probably is used to these complaints. Even yesterday, Zerodha had an outage where some trading orders at the market open weren’t being processed.

Zerodha’s founder later tweeted their rationale for closing positions on 24 February. 

But while the easy scapegoat is the broker, we need to train our sights on NSE as well as Sebi. On the lack of communication from NSE on 24 February. And why Sebi has been lax in its oversight of the stock exchanges, which Debashis Basu, Founder of, writes about:

While the NSE’s trades are cleared by NCL [NSE Clearing Ltd], trades on the BSE are cleared through Indian Clearing Corporation Ltd [ICCL]. The biggest issue in this episode was the failure of the interoperability of these two clearing houses, which are mandated by the Securities and Exchange of Board of India (Sebi). More than two years ago, on November 27, 2018, Sebi announced interoperability between these two to help brokers consolidate their clearing and settlement functions at a single clearing house, irrespective of the stock exchange on which the trade is executed. If Sebi had ensured this, the situation of the 24th could have been easily tackled. All NSE trades would be moved seamlessly to the BSE.

Basu says that despite Sebi saying that interoperability was working fine, trading turnover data actually says otherwise. And even NSE admitted that NCL wasn’t working that day. So, what’s Sebi trying to brush under the carpet? 

Last month, Sebi’s annual report highlighted that it is actively considering a proposal to introduce a framework for technical glitches where compensation needs to be paid to the investors.

When the Tokyo Stock Exchange (TSE) halted trading for an entire day on 1 October 2020, trading opportunities amounting to around 3 trillion yen (US$28.8 billion) were lost. Similar to NSE, it also failed to communicate the problem to investors (though it did to brokers). In November, TSE’s head stepped down, and other executives took pay cuts.

So, who’s going to handle these issues with the NSE and even with the dear regulator?

Update: An earlier version of this piece inadvertently attributed this quote to Zerodha –  “Now, NSE [National Stock Exchange] is the undisputed market leader, by a fair distance. But despite its tech chops, it has faced several technical glitches, causing unexpected market crashes and losses to investors. Then, there was the co-location scam, or giving priority seats to certain traders for access to faster data on the markets (read The Market Mafia by Palak Shah for some of the drama)”.  

The quote is actually from a previous edition of the BFO#199 as it appears at the beginning of this story. We regret the error.

The absentee list in the NUE race

We wrote last week (BFO#231) about India’s retail payments body National Payments Corporation of India getting a new competitor in the form of New Umbrella Entities (NUEs). Multiple alliances have been forged, and we now mostly know who is siding with whom. 

This graphic from Economic Times lays it all out. 

The central bank, the Reserve Bank of India, has extended the deadline to receive applications for forming NUEs from 26 February to 31 March, so there could be more alliances, but for now, let’s look at who is conspicuously missing in the NUE action. 

The biggest bank of them all—State Bank of India. 

In fact, no public sector bank is in the fray. Initially, SBI, Bank of Baroda, and HDFC Bank were to come together to set up an NUE, but the finance ministry scuttled the plan. Tata Group then took the place of SBI and Bank of Baroda. 

“The finance ministry has reviewed the situation and doesn't want state-owned banks to compete against flagship government of India projects such as RuPay and UPI (Unified Payments Interface), which are run by NPCI,” one of the persons said. “Concerns have been flagged around common ownership between NPCI and the bank-led NUE. This is being seen by finance ministry officials as a major competition risk.”

Keeping SBI out of forming an NUE, makes sense to avoid any conflict of interest between NPCI and the new entity. But then can any payment system function without catering to SBI’s 500 million account holders? If the country’s largest base of account holders won’t be able to take part in any new breakthrough payment system that’s being designed, it keeps SBI users out of experiencing new payments solutions, and therefore impacts the bank. So, in a way, SBI has now been dragged into the unenviable damned if you do, damned if you don’t zone in the NUE race. 

Also missing from these alliances so far is PhonePe—the poster child of UPI and the current market leader for UPI payments. It seems to have the least incentive to start something fresh and risk any conflict with UPI—which has undoubtedly reached a critical mass with over 2 billion transactions a month. Now, with all its other competitors from Paytm* to Google to WhatsApp to banks wanting to set up a new payments system, its dedication to UPI risks being divided. A distracted competitor is the best competitor for PhonePe.

Also missing so far are fintech startups and challenger banks like RBL Bank and IDFC Bank, which are also known to be tech-savvy. (Yes Bank for its part is part of an NUE consortium). Both banks have been active in striking partnerships with fintechs. So a consortium of the sorts that are in the making would be right in their wheel-house. But their absence so far, makes one question if smaller banks believe in the future of NUE. 

That means, so far, NUE doesn’t seem to be either for the largest, or for the smaller ones.

*Paytm’s founder Vijay Shekhar Sharma is an investor in The Ken. 

The Korean wave…

…has now arrived in the manga—comics or graphic novels originating from Japan—industry, which has been dominated by Japanese traditional publishers. 

Not just that, South Korean tech firms have also come up with new ways to woo readers. 

Inspired by smartphone games in which playing is free but extra content is not, the approach marked a radical departure from the typical model of selling an entire manga volume up front at prices of $4-$6.”

Readers, eager to find out what happens next, often end up paying. The business model has become standard as dozens of book sellers, tech companies and publishers rushed to offer their own apps.

Though Japan may have dominated much of the popular culture scene in Asia throughout the 1980s and 1990s, it has been on a steady decline since the 2000s. From fashion, cuisine, television drama and even pop music, South Korea has enjoyed widespread popularity not just in Asia, but around the world (I mean, who hasn’t heard Gangnam Style). 

So much so that the Japanese are taking a leaf from South Korea’s K-Pop success for producing idol groups. 

As digital surpasses print in Japan’s manga industry, time is running out for traditional manga publishers to reinvent themselves. Especially against what could soon be dubbed a K-manga revolution.

That’s a wrap for today.

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And don’t forget to write in with your thoughts and observations on how this pandemic is reshaping businesses, societies and economies. We will be back tomorrow, with the same, new-look BFO. 🙂

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