NSE IPO depends on resolution of algo trade issue, says CEO Vikram Limaye

Vikram Limaye
Vikram Limaye. Photo: Bloomberg

The timing of the National Stock Exchange’s (NSE) initial public offering (IPO) will depend on a possible settlement with the Securities and Exchange Board of India (Sebi) concerning an ongoing probe into the exchange’s algorithmic trading platform.

NSE has initiated talks with the capital markets regulator to settle the probe through the consent mechanism, said Vikram Limaye, managing director and chief executive officer of NSE.

“The timeline for the IPO is dependent on the resolution of the regulatory matters with Sebi,” Limaye said at a press conference marking 25 years of the launch of the exchange.

A two-and-half-year-long Sebi probe had found that some traders had unfair access to market data and the exchange’s algorithmic trading systems, Mint had reported last month.

Starting 2010, certain brokers had allegedly used NSE’s co-location facility to get early access to its algorithmic trading systems, gaining an unfair advantage until NSE changed its systems in 2014 to prevent misuse. Algorithmic trading refers to the use of electronic systems to execute thousands of orders in a split second. Members who co-locate their servers on exchange premises gain because their orders travel faster.

“Sebi has completed its investigations and we have again started the conversation with the regulator on consent,” Limaye said.

A consent mechanism allows an entity facing a Sebi probe to pay a fee and face some restrictions without admission or denial of alleged irregularities.

Limaye also said NSE will offer commodities trading from 1 October.

Clarity should emerge in the next two-three weeks over bringing liquidity to the upcoming international finance centre through a so-called GIFT Connect, he said.

“We are looking to evolve a structure with the input of market participants and regulators,” Limaye said.

NSE has been in talks with the Singapore Stock Exchange over the GIFT Connect. It comes against the backdrop of both being at loggerheads since February when Indian exchanges barred overseas bourses from trading in Nifty derivatives. SGX announced a new product that works just like Nifty, bypassing the Indian exchange.

This article was first published on Livemint.com