The Securities and Exchange Board of India (Sebi) is in the final stages of discussions to allow co-location services in the commodities market, a move that will give traders access to exchange infrastructure and enable swift deployment of sophisticated trading strategies, three people aware of the development told Mint. A rollout is likely in the first half of 2027, they said.
With the greenlight for co-location, market participants can place their computer servers and other IT equipment in the specialized data centres of the stock exchanges or their service providers, which will facilitate swifter trading outcomes, with every millisecond making a difference.
“Foreign portfolio investors (FPIs) want co-location so that they can participate in the Indian markets in an aggressive manner. This is being discussed at every CDAC (commodity derivatives advisory committee) meeting,” said one of the three people, who spoke on the condition of anonymity.
For financial market participants, proximity to an exchange’s trading infrastructure can reduce the time taken for orders to reach the market. The facility is particularly important for sophisticated trading strategies where speed and technological infrastructure are critical.
Under existing Sebi rules, co-location is not permitted in the commodities segment. The proposed change would bring the segment closer to the equity market, where the exchanges offer such facilities. Co-location was allowed for equities over two decades ago.