NSE audit report reveals some brokers got preferential treatment
DSIJ Intelligence / 29 Dec 2016
National Stock Exchange, one of the world’s largest stock exchange in terms of traded volumes, on December 28, filed its draft red herring prospectus (DRHP) with the market regulator SEBI for a whopping Rs 10,000 crore IPO, which will be the biggest new issue in the recent years.
National Stock Exchange, one of the world’s largest stock exchange in terms of traded volumes, on December 28, filed its draft red herring prospectus (DRHP) with the market regulator SEBI for a whopping Rs 10,000 crore IPO, which will be the biggest new issue in the recent years.
However, in the DRHP it revealed that the system used for trading gave preferential treatment to some of the brokers. According to certain sections of the media, market regulator SEBI had directed NSE to examine the matter using an external agency, to which the audit undertaken by the NSE-appointed agency revealed that the bourse's algorithm system was ‘prone to manipulation’. The enquiry highlighted specific periods when some brokers got first preference to connect to servers more frequently than others.
The audit report shows a loophole, which the NSE needs to fix. However, the news has provided fresh publicity to its IPO, which came after its MD and CEO, Chitra Ramkrishna's exit earlier this month.
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