Co-location case: SEBI issues summons to NSE employees for questioning

Buildings are reflected on the glass windows of the NSE (National Stock Exchange) building in Mumbai, India, December 27, 2016. Picture taken December 27, 2016. REUTERS/Shailesh and rade - RTX2WSSZ The Securities and Exchanges Board of India (SEBI) has started sending summons to current and former National Stock Exchange (NSE) employees after reviewing the replies of show cause notices in connection with the co-location case. "The regulator has issued summons for further questioning," a source close to the developments told Moneycontrol. "It is sending these summons in a phased manner and has started with those whose replies weren't too convincing and were directly involved with the co-location matter. The questioning began last week at the SEBI headquarters and went on for "long hours", a source said. Earlier, the regulator had given recipients of the notice 21 days to respond. Some employees who did not receive the show cause notice have also been called for questioning. “It is fact finding mission for regulator and clearly SEBI wants to find out any collusion between brokers and NSE officials which has not been revealed yet in any forensic report,” the source said. In the regulator's last board meeting, SEBI Chairman Ajay Tyagi had told reporters that an independent forensic audit would be conducted in the matter. 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. "The new chairman does want to drag this issue," said a source familiar with the developments. "On the other hand, the regulator wants to make sure that there is a thorough investigation in the case and those involved do not get away scot-free." Earlier this week, Tyagi called the case a "serious issue".