The NSE has filed a defamation suit against the business news magazine Moneylife for alleging that insiders at the exchange gave unfair advantage to certain high-frequency (algorithmic) traders.
A press release from the NSE, which doesn’t name the magazine, said the exchange has sought withdrawal of unsubstantiated and misleading reports against it and “has made a claim of ₹100 crore (which can be revised upwards)” in the Bombay High Court.
The release added that “since inception, NSE has been maintaining a high degree of surveillance and integrity in its day-to-day operation (and) strictly adheres to the rules, regulations and guidelines issued by the regulators from time to time.”
Algorithmic trading (or high frequency trading) uses computer algorithms to analyse market data, deploy appropriate trading strategies and execute trades, all at minimal cost. While the sheer number of trades provides liquidity to the market, high-frequency trades are often pulled up for distorting market prices away from the fundamental value of securities. Besides, there has been talk of malpractices as well.
Speaking to BusinessLine , Debashis Basu, Founder-Editor, Moneylife, said the magazine has responded to the NSE’s legal notice and is waiting to hear from the exchange.