India's National Stock Exchange (NSE) is planning to expand its colocation data center in Mumbai.

The data center, located at NSE's headquarters in Mumbai, will be expanded for use by NSE's trading members.

The Indian Economic Times reports that NSE plans to triple its capacity to 4,000 racks in the next three years, and that the expansion will be located in the NSE's existing building at Exchange Plaza, Bandra Kurla.

The facility currently has room for 1,400 racks, and NSE says it will increase the size to cater for future demand.

NSE is also growing its capacity to handle messages, from five million per second to 20 million per second, and said it will continue to scale as necessary.

The colocation facility was previously caught up in regulatory violation charges against NSE and seven former employees.

The NSE faced allegations of granting preferential access to certain brokers through its colocation facility between 2012 and 2014 - allowing them to keep their servers closer to the exchange's servers and use "dark fiber" to their advantage.

Hosting servers as close to an exchange is beneficial for traders engaging in high-frequency trading strategies, as it gives them a fractional latency advantage. A whistleblower raised concerns in 2015 to the Securities and Exchange Board of India (SEBI).

In 2019, SEBI directed the exchange to disgorge Rs 624.89 crore and prohibited seven top officials from associating with a listed company or a market intermediary for a period of five years. The charges were disposed of earlier this month, with SEBI changing its tack and stating that no evidence suggested a violation of regulations.

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