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The Securities and Exchange Board of India (Sebi) has dismissed regulatory violation charges against the National Stock Exchange (NSE) and seven of its former employees, including Chitra Ramkrishna and Ravi Narain, in the matter of the co-location facility. This decision, outlined in an 83-page order, was based on the absence of sufficient evidence to prove collusion or connivance. Sebi concluded that the 'test of preponderance of probability' failed to establish a link between the NSE and the alleged preferential access given to certain broking firms through the co-location facility.
The case centered around allegations of preferential access granted to specific broking firms through the use of 'dark fibre' at the NSE. Dark fibre, in the context of network connectivity, refers to unused optical fibre that can be utilized for high-speed data transmission. The accusation was that these chosen brokers were given an advantage over other members by being able to connect to the co-location facilities via dark fibre before others. Co-location facilities, located in close proximity to stock exchanges, allow brokers to install their trading servers, providing them with faster access to exchange data.
This case has been a significant development in the Indian financial markets, highlighting concerns about fairness and transparency. The co-location facility, while designed to enhance speed and efficiency in trading, has been the subject of scrutiny due to the potential for abuse. Sebi's decision to dismiss the charges, while acknowledging the lack of sufficient evidence, underscores the complexities involved in investigating such matters. The case serves as a reminder of the importance of robust regulatory oversight and the need to ensure a level playing field in financial markets.
Source: Sebi disposes of case against NSE, its former employees in co-location case