What is Co-location Trading?

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What is Co-location Trading? Blog Image

Overview:

The Securities Appellate Tribunal recently asked National Stock Exchange (NSE) to pay ₹100 crore towards SEBI’s (Securities and Exchange Board of India) investor protection fund for lapses in a case registered in May 2018 concerning an alleged co-location trading.

Why in news?

  • Securities and Exchange Board of India passed its first order after adjudicating the co-location case in April 2019, when it fined the National Stock Exchange (NSE)  a sum of ₹625 crores. 

Key facts about Co-location Trading

  • The National Stock Exchange 2009 started to offer co-location services to members of the exchange. 
  • It allows a member to set up his server in a specifically earmarked data centre within the NSE’s exchange premises for a certain price.
  • The relative proximity allows members wishing to gain access to the entirety of buy and sell orders sent because of the reduced time taken for order execution.
  • Is it Illegal? : Stock exchanges across the world allow the practice to flourish as a paid service. The SEBI allowed exchanges to offer co-location in 2008.

What is the Securities Appellate Tribunal?

  • It is a statutory body established under the provisions of Section 15K of the Securities and Exchange Board of India Act, 1992 
  • It hears and disposes of appeals against orders passed by 
  • The Securities and Exchange Board of India
  • Insurance Regulatory Development Authority of India 
  • The Pension Fund Regulatory and Development Authority (PFRDA) 

 


Q1) What is the role of Pension Fund Regulatory and Development Authority?

Pension Fund Regulatory and Development Authority is the regulatory body under the jurisdiction of Ministry of Finance,Government of India for overall supervision and regulation of pension in India.

Source: Indian securities tribunal gives relief to NSE in colocation case