NSE sets aside over Rs 4,000 cr of revenues from its co-location operations

Sebi had directed exchange to transfer this income to a bank account pending probe

The National Stock Exchange (NSE) has so far set aside over Rs 4,000 crore of revenues from its co-location operations, following directions from the Securities and Exchange Board of India (Sebi), which has been investigating NSE’s co-location operations for lapses.

Disclosures by NSE shows that as of June 30, 2020, an amount of Rs 4,066.78 crore (Rs 3,606.73 crore as of March 31, 2020) was transferred to a separate bank account and then has been invested in accordance with Board of directors approved investment policy and procedures.

The market watchdog had directed that pending completion of the investigations, all revenues emanating from the co-location facility -- starting from September, 2016 -- be transferred to a separate bank account.

NSE also pointed out that “it has strong grounds to contest the above orders including monetary liability (including from pending adjudication proceedings) raised by Sebi. Accordingly, no provision for any liability in this regard is considered necessary in the financial results as of and for the quarter ended June 30, 2020”.

The orders pertain to those concerning Co-location investigations and Dark Fibre matter.

Among the financial disclosures, the exchange reported consolidated profit before tax (PBT) of Rs 922.65 crore in June quarter, as against Rs 638.78 crore in corresponding quarter in previous financial year (2019-2020).

The company’s operating revenues improved by 32 per cent on a Y-O-Y basis to Rs 1,073.55 crore.

Trading services segment accounted for bulk of the profits for the stock exchange, garnering Rs 708.53 crore or 96.2 per cent of the combined profits of various business segments.

Among the services part of the standalone operations, listing fees was up by little over four per cent on Y-O-Y basis, to Rs 23 crore in June quarter. Investment bankers say this can be attributed to slowdown in primary issuances or initial public offerings (IPOs) in light of the Covid-19 pandemic.

The treasury income grew by 48 per cent to Rs 163 crore in June quarter.

NSE is also working on its IPO and is working towards getting the final go-ahead from Sebi.