The Securities and Exchange Board of India has returned an application made by National Stock Exchange of India, seeking to settle a probe into alleged lapses in preferential access given to a few stock brokers and traders through its co-location facilities.
“NSE is in receipt of a letter from SEBI returning the consent application filed by NSE in the co-location matter, on account of ongoing investigations relating to the same matter,” the country's largest stock exchange said in a statement on Thursday.
This will come as a setback for NSE and its MD and CEO Vikram Limaye, who had taken charge of the country's premier bourse only in July last year, and had made sorting out the regulatory issue his immediate priority. Just a couple of days after he had taken charge, NSE had filed a plea with the market regulator for settlement of the co-location issue under the consent process.
SEBI has been investigating complaints related to NSE's co-location facilities. Several former top executives of the exchange had also been issued show causes notices earlier in the matter.
The market regulator has now informed NSE that it can file the consent application again after the investigations are complete and the exchange said it intends to do the same “in due course.”
The issue dates back to 2015, when a whistle-blower wrote a letter to SEBI highlighting issues at NSE's co-location facilities.
READ MORE
- Nifty Smallcap 100 index touches all-time high amid bull run
- Sensex, Nifty surge on firm global cues, extend gains on 4th day
- NSE begins derivative contracts on Nifty Next 50 from today; all you need to know
- How much did Indian investors gain in two-day bull run? Dalal Street extends gains on third day
Co-location means the server of the particular broker is located within the premises where the exchange's datacentre is located, for a fee. This helps in faster data movement. NSE launched co-location services in 2010.
It was alleged that certain stock brokers seemed to be getting early access to NSE's servers.
The exchange hired consulting firm Deloitte for an independent audit and lapses were found. In a red herring prospectus filed in late 2016 in relation to a proposed initial public offering, NSE disclosed that the the independent probe highlighted trends for certain periods where a few stock brokers appeared to be the first to connect to specific servers significantly more often than others.
The NSE IPO has been delayed due to the SEBI probe.
In a recent interview with THE WEEK magazine, Limaye had said that key to do things on his agenda were to get the regulatory issues sorted and the IPO, although the later would be contingent on sorting out the regulatory issues.
NSE said on Thursday that it was hopeful it would be able to float the IPO in the the financial year-ending March 2019.