UPSC Prelims Marathon Quiz

Recently, Securities and Exchange Board of India (SEBI) has barred National Stock Exchange (NSE) from raising money on securities markets for six months and has also fined NSE Rs 1000 crore under NSE colocation scam.

Statement 1 is correct. Under the co-location facility, trading members can place their servers in the exchange’s data centre, where they get faster access to the price feed, helping in swift execution of trades. The NSE’s co-location facility provides access to brokers for a cost. Greater access means brokers can execute trades faster.

Statement 2 is incorrect.In co-location, a system popular with traders using sophisticated trading programmes, stock exchanges allow market participants to set up a server on exchange premises. This would ensure faster access to the price feed and thus swift execution of trades. But it does not provide information to the brokers before the opening time of stock exchanges.

Statement 3 is incorrect.The Co-location system is not illegal in India. National Stock Exchange provides real time trade data to market participants on the basis of the package they have chosen. The