Sebi asks bourses to fairly provide co-location facility

In a move to avoid any undue benefits to certain brokers due to physical proximity of their systems with that of stock exchanges, market regulator Sebi today directed the bourses to provide co-location facility in fair and transparent manner.
Commonly known as 'co-location or proximity hosting' in the market parlance, this service offered by the stock exchanges to stock brokers and data vendors allow them to locate their trading and other systems within the bourses premise.
While facilitating co-location facility, Securities and Exchange Board of India (Sebi) directed stock exchanges to provide this service in a "fair, transparent and equitable manner" and comply with its circular within three months.

The exchanges would have to ensure that all participants who avail co-location hosting facility have fair and equal access to facilities and data feeds provided by them.
Bourses would have to publish on their websites suitable quarterly reports on latencies (measure of time delay experienced in a trading system), the circular said.
Besides, the circular asks exchanges to ensure that the size of the co-located space is sufficient to accommodate all the stock brokers and data vendors who are desirous of availing the facility.

Stock exchanges would have to expeditiously decide on the request of the desirous stock brokers or data vendors for availing co-location facility and communicate the decision within 15 working days from the receipt of the request. In case of a rejection, bourses would have to provide reasons in writing to them.

The exchanges would have to facilitate stock brokers to receive data feeds from other recognised bourses at the co-location services and allow routing of orders to other stock exchanges from the co-location facilities.
The exchanges would have to provide description, including details on fees to be charged, of the co-location including requirements to be fulfilled by brokers or data vendors interested in the facility on their websites.
In order to ensure that the facility of co-location facility does not compromise integrity and security of the data and trading systems, exchanges would have to implement suitable mechanism to protect their systems and systems of stock brokers and data vendors from unauthorised access.

Th circular bars bourses from providing access of their trading platform and databases in any form to the personnel of stock brokers or data vendors.