The Panoramic View Of The NSE Co-Location Case

The ‘NSE co-location’ case is a security market scam that surfaced owing to the courage of a whistle-blower in 2015, in which some brokers and National Stock Exchange (“NSE”) officials were involved in sabotaging the system for securing gains during the market trade. The first question which arises in this instance is – What do we mean by ‘co-location’ in this regard? Co-location is a service given by the NSE allowing trading members to have their own servers within the exchange’s data centre, paying a fee for the same. This enables brokers to achieve faster access to pricing data and to execute trades in a time efficient manner by reducing the time in data transmission. This gave an edge to the brokers who used this facility against who did not use the same. Therefore, opting for ‘co-location’ gave brokers the threefold advantage – (1) proximity to the server; (2) reduced time in execution of trade deals; and (3) edge over other competing traders.