The Securities and Exchange Board of India (Sebi) has turned down a settlement plea of the National Stock Exchange (NSE) about the co-location matter where certain brokers were allegedly given preferential access to high-frequency trading.

The exchange had reportedly filed a plea under the consent mechanism which allows entities to settle any violation without admission or denial of guilt.

A Moneycontrol report said Sebi rejected NSE’s consent plea following which it will pass an order against the bourse.

It is learnt that after Sebi turned down the consent plea, it gave a personal hearing to NSE recently and an order is likely to be passed shortly.

The consent application made by NSE was regarding the alleged collusion of brokerage OPG Securities with some employees of the NSE.

Sebi had come up with a series of orders on the matter.

In April 2019, it directed the NSE to disgorge profits worth more than Rs 687 crore, comprising an initial amount of Rs 625 crore, along with 12 per cent annual interest in the case. However, there was a relief for the bourse in January last year when the Securities and Appellate Tribunal (SAT) set aside Sebi’s order. It, however, directed the exchange to pay Rs 100 crore to the regulator for lack of due diligence.

Orders passed by Sebi regarding the fines levied on former employees of the NSE were also quashed by the appellate tribunal.

The NSE co-location facility allows stock brokers to take on rent-specific racks and co-locate their servers and systems within the exchange premises.

The primary objective of the co-location services of the NSE is to reduce latency for connectivity to the exchange’s trading systems for Direct Market Access, algo trading and Smart Order Routing.

The appellate tribunal said the NSE has not indulged in any unethical act or has unjustly enriched itself. It added that the bourse has not adhered to its norms and guidelines.