Market regulator to seek help of forensic auditors

Market regulator to seek help of forensic auditors

Markets regulator Sebi has said that it will seek the help of forensic auditors with regards to the ongoing probe into the NSE co-location case.

The watchdog has already issued show-cause notices to the National Stock Exchange (NSE) and several of its current and former executives as part of its investigation into alleged lapses in  high-frequency trading offered through NSE’s co- location facility.

Briefing reporters after its board meeting on Wednesday, Sebi Chairman Ajay Tyagi said that the regulator is examining the exchange’s response to the show-cause notice.

Besides, the regulator will engage the forensic auditor in the NSE co-location case to probe if brokers made unfair gains in connivance with exchange officials. Earlier, the NSE had appointed forensic auditors to look into the issues related to the co-location issue.

The case relates to some brokers allegedly getting preferential access through co-location facility at the NSE, early login and ‘dark fiber’ — which can allow a trader a split-second faster access to data feed of an exchange. Even a split-second faster access is considered to result in huge gains for a trader.

Some staff members allegedly told the forensic auditors appointed by the NSE that they acted on “advice from seniors” regarding preferential access for some to the co-location facility.