NSE co-location case: SEBI appoints enquiry officer to examine Deloitte's audit

The Securities Exchange Board of India (SEBI) has appointed an enquiry officer in the on-going case of National Stock Exchange’s (NSE) co-location facility. The officer will examine the forensic audit conducted by Deloitte India and has been asked to verify Deloitte’s findings with SEBI’s internal data, says a Business Standard report. NSE had appointed Deloitte to conduct an audit after SEBI said that the stock exchange’s systems - unicast architecture used at its co-location facility - were susceptible to manipulation. Deloitte’s report has not found any individual involvement or error, the report said. The examiner appointed will also look into volumes that were traded on the faulty system. The report also concluded that no monetary benefit was derived from the system, which will also be cross-checked by the examiner. An NSE spokesperson refused to comment as the case was between NSE and the market regulator, the report said. Once the enquiry officer inspects all related documents and reports, findings will be submitted to the SEBI board. No deadline for this has been mentioned in the media report. The findings will be critical for the NSE’s initial public offering (IPO), which has been delayed due to the case. Ajay Tyagi, SEBI Chairman, had said that the IPO will have to wait till this case is resolved. The market regulator’s technical advisory committee (TAC) had submitted its report on the case in March last year. According to this, some traders had unfair access to the market data. SEBI has initiated the investigation in early 2015 after receiving three complaints on brokers colluding with NSE employees or staff to get internal information.