Sebi may allow colocation in commodity bourses to boost efficiency

Commodity derivatives advisory panel at Sebi is reviewing a proposal to allow colocation, which could improve price discovery, liquidity, and market participation

Markets regulator Securities and Exchange Board of India’s (Sebi’s) Commodity Derivatives Advisory Committee (Cdac) is actively discussing allowing colocation facilities for commodity derivatives markets, a move expected to boost efficiency and liquidity, and aligning the sector with global and equity markets, sources said.

 

Colocation, widely used in the equities markets, enables trading members to place their systems near exchange servers for ultra-low latency. Industry players believe the transparent equity market colocation model -- including the latency data publication -- can be effectively replicated for commodities.

 

Sources familiar with the matter said the Multi-Commodity Exchange (MCX), following its technology transition to