NSE Co-location case: Here's what the SEBI committee headed by G Mahalingam may look into

The Securities and Exchange Board of India’s (SEBI) Investor Protection Committee headed by G Mahalingam is looking into various aspects that have emerged on account of the NSE co-location scam.

People in the know have told CNBC-TV18 that the market regulator is sensitive to the fact that an exchange like the NSE is not nearly a commercial entity. Any exchange is a market infrastructure institution and hence must uphold regulatory protection, and investor protection and hence cannot be treated nearly as a commercial entity.

The SEBI also believes that as a market infrastructure institution exchanges act as a first-level regulator, and hence they must keep a record of any and all pricing sensitive information. And in keeping with that, the secretarial staff and audit committees need tightening and many of these compliance and governance-related aspects need to be looked into.

Cybersecurity will be another aspect that needs to be prioritized and again is something that the committee would be likely to focus on.

What the committee is going to recommend in terms of the road ahead, will be keenly watched. What should be the metrics that will be used to evaluate the performance of market infrastructure institutions like the NSE?

The committee is also possibly going to look at a structure that will ensure that there is tighter compliance as well as better oversight.