The market regulator said on Tuesday the National Stock Exchange (NSE) did not exercise due diligence when putting in place a network that allowed high frequency traders unfair access to some network servers at the exchange.
The Securities and Exchange Board of India (Sebi) barred the NSE from raising money on the securities market directly or indirectly for six months.
Sebi has been investigating allegations that NSE officials provided high frequency traders unfair access through co-location servers placed at the site of exchange, which could speed up algorithmic trading.
It asked two former NSE chief executive officers, Ravi Narain and Chitra Ramkrishna, to "disgorge" 25 per cent of their salaries drawn during a certain period.
Narain and Ramkrishna have been prohibited from "associating with a listed company or a Market Infrastructure Institution or any other market intermediary for a period of five years," Sebi said in a 104-page order.
NSE was asked to pay within 45 days about Rs 624.89 crore with an interest rate of 12 per cent a year effective from April 2014 to the Investor Protection and Education Fund.
(With inputs from PTI and Reuters)