The move comes after a committee, appointed by the Securities and Exchange Board of India (Sebi), was constituted to investigate the practice of co-location and algo trading.
The committe had subsequently found instances of breach of fair access norms by the exchange. It also noted that NSE provided unfair preferential treatment to some brokers.
The findings by the expert committee had prompted Sebi to write a letter to NSE Chairman Ashok Chawla last month. The regulator had asked NSE to initiate an independent probe of allegations pointed out by the expert committee in its report and suggested measures to be taken.
"NSE has appointed Deloitte to probe allegations of providing unfair privilege access to some brokers for its 'algo' trading," a spokesperson of the exchange said.
Algorithmic trading or 'algo', in market parlance, refers to orders generated at a super fast speed by use of advanced mathematical models that involve automated execution of trade, while co-location involves setting up servers on the exchange premises.
In July, the committee had examined these allegations and asked the exchange to appear before its technical panel to present its case.
The investigation comes at a time when NSE is gearing up for its initial public offering. The exchange has already appointed merchant bankers for the same.
Sebi has already floated a consultation paper on algo trade, wherein it has proposed various checks and balances to prevent any misuse. However, the trading community is divided on these proposals.
The regulator has proposed to introduce resting time for orders, random delays and random speed bumps, separate queues for co-location and non co-location orders for strengthening the regulatory framework for algo trading and co-location facility.