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The National Stock Exchange on Tuesday submitted the forensic audit report on the co-location issue, prepared by consultancy EY, to the regulator SEBI.
In a press release, the bourse said that it has also submitted a study conducted by the ISB to determine whether certain NSE brokers made any abnormal profits as a result of getting preferential access to the servers of the exchange with the co-location facility.
EY’s report covers the cash, currency derivatives and interest rate futures markets.
“We will not be in a position to comment on the content or findings of the reports,” NSE said in a statement.
Deloitte, after a forensic audit, had named a few brokers who had profiteered with this facility.
The co-location issue relates to the facility allowed to some brokers and institutional traders to buy rack space close to the exchange servers.
The proximity improves the latency (speed of execution of order). It’s only a couple of hundred large and wealthy traders who use these facilities.
The episode of unfair access took place between 2012 and 2014; the exchange has since changed its system at the colo facility after it received multiple complaints from other users of these facilities about some brokers gaming the system.
Earlier this year, SEBI had issued show cause notices to NSE and 14 of its current and former employees, for their role in the alleged scam involving co-location of brokers’ servers next to NSE’s trading servers.
Among those show-caused include Ravi Narain, former vice-chairman of NSE and Chitra Ramakrishna, former MD of the bourse.
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