Facing allegations of providing unfair privilege access to some brokers for its 'algo' trading, NSE plans to rope in an independent agency to examine the matter and suggest measures that may need to be taken.
The move comes after a Sebi-appointed committee, on the practice of co-location and algo trading, found instances of breach of fair access norms providing unfairly preferential treatment to some brokers.
The findings by the expert committee prompted the Securities and Exchange Board of India (Sebi) to write a letter to NSE Chairman Ashok Chawla.
Sources said NSE will appoint an external agency to probe the matter in the wake of allegations of unfair access for some brokers in algo trading.
Queries sent to the spokesperson of the National Stock Exchange (NSE) remain unanswered.
Algorithmic trading or algo in market parlance refers to orders generated at a superfast speed by use of advanced mathematical models that involve automated execution of trade while co-location involves setting up servers on the exchange premises.
Sebi said NSE will have to initiate an independent investigation of allegations pointed out by the expert committee in its report and suggest measures that may need to be taken, sources said.
The exchange has to submit its report to Sebi within three months, they added.
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.
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