NSE submits EY forensic audit report to Sebi
The scandal-hit National Stock Exchange on Tuesday submitted the forensic audit report on the co-location issue to markets regulator Sebi. The report, prepared consultancy EY--earlier known as Ernst & Young-relates to the cash market, currency derivatives and interest rate futures transactions.
Besides, the exchange also submitted a study conducted by Hyderabad-based Indian School of Business (ISB) to determine whether certain NSE brokers made any abnormal profits from the preferential access they got to the servers of the exchange through the co-location facility.
Earlier, Deloitte, after a forensic audit of the equity derivatives platform, had named a few brokers who had profiteered from this facility.
Sebi will now outline a future course of action based on the findings of the reports.
"The NSE today submitted to the Securities and Exchange Board (Sebi) the reports prepared by EY and ISB relating to the co-location matter, that is being reviewed by Sebi," the exchange said in a release.
The case relates to some brokers allegedly getting preferential access to NSE servers through the co-location facility, early login and access to the 'dark fibre'which can allow them a split-second faster access to the data feed of the exchange. Even a split-second faster access can yield huge gains for a trader.
In July, the NSE had approached Sebi to settle the case through the consent mechanism. The Sebi has not responded to the proposal as yet, though.
The controversy has delayed NSE’s IPO plans. Its rival BSE has already gone public in January.