Market regulator SEBI has directed the National Stock Exchange of India to disgorge Rs 624.89 crore in the co-location case.
According to the regulator's order, NSE has also been barred from accessing the securities market directly or indirectly for a period of six months.
The misuse of the bourse's co-location facility came to light in 2015 when a whistleblower alleged collusion between few employees of the stock exchange and brokers.
It was alleged that collusion and lax of oversight allowed a few brokers faster access to market data.
"NSE has committed a fraudulent and unfair trade practice as contemplated under the SEBI (PFUTP) Regulations, I find that it is established beyond doubtthat NSE has not exercised the requisite due diligence while putting in place the TBT architecture," the order read.
"The same created a trading environment in which the information dissemination was asymmetric, which cannot be considered fair and equitable."
As per the order, the amount along with interest calculated at the rate of 12 per cent per annum from April 1, 2014 onwards will be used for Investor Protection and Education Fund (IPEF).
Further, the regulator directed NSE to "carry out system audit at frequent intervals, after through appraisal of the technological changes introduced from time to time; reconstitute its standing committee on technology at regular intervals to take stock of technological issues; and frame a clear policy on administering whistle blower complaints".
In addition, the order directed Ravi Narain, former MD and CEO of NSE to disgorge 25 per cent each of their salary drawn for FY 2010-11 to 2012-13 and Chitra Ramkrishna, another former MD and CEO of NSE to disgorge 25 per cent of her salary drawn for FY 2013-14.
Speculation is rife that after the six-month period, NSE might enter the securities market with an IPO.
On its part a NSE spokesperson said: "NSE is in the process of examining SEBI Order passed today and will take appropriate steps as may be legally advised."
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