NSE's revenues from its frozen co-location facility climb to Rs 9.45 bn

The National Stock Exchange of India’s (NSE’s) revenues from its co-location facility, frozen into a separate bank account, have climbed to Rs 9.45 billion. The exchange will not be able to access these funds till the time an investigation into wrongdoings at its co-location facility are completed.  

In September 2016, market regulator Securities and Exchange Board of India (Sebi) directed the NSE to park revenue generated from its co-location business into a separate bank account till the matter was settled. More than a fourth of the NSE’s revenues are garnered from the co-location business. 

“Till date, an amount of Rs 9.45 billion was transferred to a separate bank account and the same along with income earned thereon remains invested in mutual funds,” the stock exchange said in a filing for its December quarter results. 

“The management is of the view that pending conclusion of this matter with the Sebi, a reliable estimate of the obligation in respect of this matter cannot be presently made and therefore no provision or adjustment to this effect has been made in the financial results for the quarter and nine months ended December 31, 2017,” it further said.

The NSE on July 20, 2017, had filed a plea before the Sebi to settle the matter through the consent route. The Sebi is currently investigation the matter and trying to establish if any entities involved made any unlawful gains due to lapses at its colocation facility.

“Sebi has directed that, pending completion of investigation to the satisfaction of Sebi, all revenues emanating from co-location facility, including the transaction charges on the trades executed through co-location facility, be placed in a separate bank account,” the NSE said.

Meanwhile, the NSE reported consolidated net profit of Rs 4.05 billion on revenues of Rs 7.78 billion for the quarter ended December 2017. The revenues were up 6.4% sequentially and 25.6% on a year-on-year (y-o-y) basis. Profits are up 15% sequentially and 52% y-o-y.

Revenues for the first nine months of FY18 are at Rs 22 billion, up 12% y-o-y, while profits during the period have risen 28.5% to Rs 11 billion. 

The NSE said its contribution to the core settlement guarantee fund (SGF), as of December 31, 2017, was at Rs 23 billion, of which Rs 7.2 billion was contributed towards core SGF of its clearing corporation arm, the National Securities Clearing Corporation.