What is Co-location Trading?

14-09-2024

06:30 PM

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1 min read
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.

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.

Key facts about National Stock Exchange

  • It is one of the two main stock exchanges in India, with the other being the Bombay Stock Exchange (BSE).
  • The NSE is a prominent and technologically advanced stock exchange, and it plays a crucial role in India's financial markets.
  • It is India's largest financial market and the fourth largest market by trading volume.
  • The National Stock Exchange of India Limited was the first exchange in India to provide modern, fully automated electronic trading.

Q1: What is Nifty?

NIFTY is a market index introduced by the National Stock Exchange (NSE). It is a blended word – National Stock Exchange and Fifty coined by NSE. Nifty was established in 1996 with the name CNX Nifty. Further, in 2015, it was renamed Nifty 50.

Source: NSE co-location case: How Sebi found violations in 2019 but saw no evidence in 2024