NSE may redraft its algorithmic trading norms

National Stock Exchange of India (NSE) is redrafting its algorithmic trading policy after a forensic audit by Deloitte India found that the exchange’s systems were prone to manipulation, Mint reported on Thursday quoting two persons privy to the information.

Consulting firm EY has been roped in to audit the systems that help algo trading. The exchange’s information price dissemination information will be key to this audit which aims to ensure that NSE’s systems can’t be tampered with.

NSE had on December 28 disclosed that the audit that the platform and its co-location facility were “prone to manipulation” and made way for “potential preferential access” to a few brokers.

Though the audit had pointed out that preferential access to some brokers may not have been possible without the knowledge of a few NSE officials and staff, it stopped short of calling it “collusion or connivance” due to lack of email records.

“This audit is in addition to the Deloitte India forensic audit done last year. This is to ensure that none of NSE’s systems are prone to any manipulation. The audit would focus on NSE’s information (price) dissemination systems,” one of the two people cited above said, requesting anonymity.

While email sent to NSE spokesperson on Wednesday didn’t fetch a reply, EY declined to comment, Mint said in its report.