NSE seeks to settle co-location case with Sebi

Within a week of assuming charge as the head of the National Stock Exchange (NSE), the new exchange management led by CEO Vikram Limaye today approached the regulator Sebi to settle the co-location case through the consent mechanism.
"The exchange has filed an application today with Sebi for settlement of the co-location issue under the consent process,?under the settlement regulations of Sebi," NSE said in a statement.
The exchange also said it would work with the capital market regulator "for an early resolution of this matter".
Under the consent mechanism, entities can seek to settle cases with the regulator after payment of certain charges and other expenses, without admission of guilt.

The move comes amidst Securities and Exchange Board stepping up its probe into the alleged lapses in high- frequency trade offered through NSE's co-location facility, and the regulator also holding back the exchange's IPO filing.
The watchdog is also looking into the role of some top NSE officials in the matter.

The co-location case relates to some brokers allegedly getting preferential access through the NSE's co-location facility, early login and access to the 'dark fibre'--which can allow them a split-second faster access to datafeed of the exchange. Even a split-second faster access can yield huge gains for a trader.
The development comes with days of Limaye announcing that his top priority was to clear the regulatory glare on the exchange.

This Monday, the day he assumed office as CEO & MD of NSE, Limaye had said: "My immediate priorities will be to focus on some of the regulatory issues facing NSE are sorted out..Obviously IPO is an important priority for me but that would happen only once all the regulatory issues are sorted out."
Later that day Limaye had told PTI that he was expecting forensic reports by EY within a month on the co- location issue.
"There are one or two things which are awaited. One is the EY forensic audit report on currency derivatives and the same on cash markets is likely to be out in three to four weeks...Resolution of the co-location issue is my top priority and our dialogue with Sebi in this regard is ongoing.

"While I can't give a timeline on when the probes into the matter would be completed as Sebi has its own process, we will ensure full cooperation with the regulator so that the issue is appropriately resolved," Limaye had told PTI.
The NSE had filed for IPO last December with the Sebi, but regulatory approval has been hanging fire due to issues surrounding the ongoing probe into the co-location case.