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Sebi's forensic audit on NSE brokers to establish gains

Sebi's latest move could be critical in determining the finality of the case

Shrimi Choudhary  |  Mumbai 

Sebi's forensic audit on NSE  brokers to establish gains

The capital regulator, the Securities and Exchange of India (Sebi), is in the process of appointing a forensic auditor to ascertain if brokers and their clients made any profit by gaining preferential access to the colocation (colo) facility of the (NSE). 

Although and auditor Deloitte have established the trading systems at the NSE’s colo facility were prone to manipulation, so far, they have not been able find any proof of entities — a part of the ecosystem — making any monetary gain. Sebi’s latest move could be critical in determining the finality of the case, which the regulator has been probing since 2015. 

is the process of appointing a forensic auditor to inter alia determine the benefits/profits made by stockbrokers and their clients, software providers and any other entity by getting preferential access/treatment from the NSE,” Chairman had said in a letter dated June 14. 

The letter — a copy Business Standard has accessed — addresses member Kirit Somaiya. 

has initiated a comprehensive investigation to examine connivance/collusion of the NSE’s employees with stockbrokers and any other entity to facilitate preferential access/treatment from the NSE,” the letter further says.

chairman also briefed the member about the action taken so far in the matter.

Based on an internal examination, has issued show cause notices (SCNs) to the and 14 officials for alleged violations of Securities Contracts (Regulation) Act and Stock Exchange and Clearing Corporation regulations. 

The SCN mentions the failure on the part of the officials in ensuring fair access and non-cooperation during the examination.

Meanwhile, the exchange is keen to settle the unfair access controversy through the consent mechanism. The decision in this regard was taken by the board at its meeting held earlier this month. 

The board is of the view that the exchange is suffering due to overhang of the case.

The allegations of preferential access against the are for a period between 2011 and 2014, when certain brokers allegedly exploited the gaps in the algo-trading system to gain unfair access.

graph

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Sebi's forensic audit on NSE brokers to establish gains

Sebi's latest move could be critical in determining the finality of the case

Sebi's latest move could be critical in determining the finality of the case
The capital regulator, the Securities and Exchange of India (Sebi), is in the process of appointing a forensic auditor to ascertain if brokers and their clients made any profit by gaining preferential access to the colocation (colo) facility of the (NSE). 

Although and auditor Deloitte have established the trading systems at the NSE’s colo facility were prone to manipulation, so far, they have not been able find any proof of entities — a part of the ecosystem — making any monetary gain. Sebi’s latest move could be critical in determining the finality of the case, which the regulator has been probing since 2015. 

is the process of appointing a forensic auditor to inter alia determine the benefits/profits made by stockbrokers and their clients, software providers and any other entity by getting preferential access/treatment from the NSE,” Chairman had said in a letter dated June 14. 

The letter — a copy Business Standard has accessed — addresses member Kirit Somaiya. 

has initiated a comprehensive investigation to examine connivance/collusion of the NSE’s employees with stockbrokers and any other entity to facilitate preferential access/treatment from the NSE,” the letter further says.

chairman also briefed the member about the action taken so far in the matter.

Based on an internal examination, has issued show cause notices (SCNs) to the and 14 officials for alleged violations of Securities Contracts (Regulation) Act and Stock Exchange and Clearing Corporation regulations. 

The SCN mentions the failure on the part of the officials in ensuring fair access and non-cooperation during the examination.

Meanwhile, the exchange is keen to settle the unfair access controversy through the consent mechanism. The decision in this regard was taken by the board at its meeting held earlier this month. 

The board is of the view that the exchange is suffering due to overhang of the case.

The allegations of preferential access against the are for a period between 2011 and 2014, when certain brokers allegedly exploited the gaps in the algo-trading system to gain unfair access.

graph

image
Business Standard
177 22

Sebi's forensic audit on NSE brokers to establish gains

Sebi's latest move could be critical in determining the finality of the case

The capital regulator, the Securities and Exchange of India (Sebi), is in the process of appointing a forensic auditor to ascertain if brokers and their clients made any profit by gaining preferential access to the colocation (colo) facility of the (NSE). 

Although and auditor Deloitte have established the trading systems at the NSE’s colo facility were prone to manipulation, so far, they have not been able find any proof of entities — a part of the ecosystem — making any monetary gain. Sebi’s latest move could be critical in determining the finality of the case, which the regulator has been probing since 2015. 

is the process of appointing a forensic auditor to inter alia determine the benefits/profits made by stockbrokers and their clients, software providers and any other entity by getting preferential access/treatment from the NSE,” Chairman had said in a letter dated June 14. 

The letter — a copy Business Standard has accessed — addresses member Kirit Somaiya. 

has initiated a comprehensive investigation to examine connivance/collusion of the NSE’s employees with stockbrokers and any other entity to facilitate preferential access/treatment from the NSE,” the letter further says.

chairman also briefed the member about the action taken so far in the matter.

Based on an internal examination, has issued show cause notices (SCNs) to the and 14 officials for alleged violations of Securities Contracts (Regulation) Act and Stock Exchange and Clearing Corporation regulations. 

The SCN mentions the failure on the part of the officials in ensuring fair access and non-cooperation during the examination.

Meanwhile, the exchange is keen to settle the unfair access controversy through the consent mechanism. The decision in this regard was taken by the board at its meeting held earlier this month. 

The board is of the view that the exchange is suffering due to overhang of the case.

The allegations of preferential access against the are for a period between 2011 and 2014, when certain brokers allegedly exploited the gaps in the algo-trading system to gain unfair access.

graph

image
Business Standard
177 22