Zerodha’s prompt action hailed as ‘Overtrader’ loses ₹10 lakh due to a bug, gets refund in 48 hours. What went wrong?

A bug in Zerodha's platform caused a loss of ₹10 lakh to a user, but the online broking platform promptly intervened to ensure a refund after the issue was brought to its notice on social media.   

A user on X (formerly Twitter), ‘Overtrader,’ recounted his experience of losing ₹10 lakh due to a technical glitch on the Zerodha platform on July 9, 2024. The user detailed the ordeal in a series of posts, highlighting both the initial loss and the resolution process.

What did he tweet?

"REFUND RECEIVED.. of 10L LOSS due to Zerodha glitch.. within 48 hours.

In their first post, the user expressed relief and gratitude upon receiving a refund for the substantial loss incurred. The post emphasised the prompt action taken by Zerodha to address the issue within 48 hours.

Second Post: Final Update on 10L Loss

FINAL UPDATE on 10L loss on Zerodha due to technical error

"We are really sorry, we take full accountability; however, no refund will be issued." That's what I thought would happen. But...

The user provided a detailed timeline of events, outlining the steps taken to resolve the issue:

Raised the issue yesterday at 9:30 on X.

Created a ticket on Zerodha at 12:31, which was quickly taken up by Mr. Mehfooz.

Registered a complaint on SEBI Scores (the regulator's complaint redressal system) at 12:45.

Received the first call from Zerodha at 14:34, followed by calls at 15:38 and 19:16.

Posted a breakdown of the issue on X at 19:42.

Zerodha's prompt response and efforts to understand the user's concern were also highlighted in the post by the user.

Received another call today at 15:45 and had an hour-long discussion on the issue.

Mehfooz from Zerodha acknowledged the breakdown mentioned in the user's post, confirming that the timeline matched the events that transpired with the user's orders. They participated in the loss calculation and agreed on the refund amount, the user posted.

Outcome

🎯REFUND ISSUED

Total loss due to glitch: ₹9,56,000

Refund issued: ₹9,00,000"

He further added, “Thank you @zerodhaonline #Zerodha for fixing it quickly and special thanks to @Rahul_7795 @khanzubare @KiranjitDas86 and the entire trading community. I'm in debt to you all.”

What went wrong?

The user also posted a detailed account of how the issue could have happened.

The user lost ₹10 lakh due to an implementation issue, or a developer's bug, in Zerodha's system, not because of a technical glitch or network issue. The user placed market orders starting from 9:19 AM, and all these orders appeared in the order book with an OPEN status. Despite attempting to cancel the orders at least 15-20 times, the user was unsuccessful. During this time, the available margin was fluctuating.

Behind the scenes, the user's market orders were successfully sent to Zerodha's servers and then forwarded to the NSE (National Stock Exchange). NSE responded with successful order confirmations, which Zerodha received. However, Zerodha made a critical error—it failed to update the status of the executed orders from OPEN to COMPLETE. This oversight caused the orders to get stuck on Zerodha's servers.

As a result, the user could not see any orders in the EXECUTED section of the order book. They all remained in the OPEN section. The orders were already executed on Zerodha's servers, which is why the user couldn't cancel them. Since Zerodha never updated the status, the user couldn't see the executed orders either.