Market regulator Sebi rejects NSE's settlement plea in co-location matter

The market regulator refunded Rs 300 crore to the exchange following the directions by the Supreme Court in the same case

NSE

In 2019, Sebi had directed NSE to disgorge Rs 625 crore for the alleged violations. While setting aside the order, SAT had directed NSE to deposit Rs 100 crore for lack of due diligence

Khushboo Tiwari Mumbai

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The National Stock Exchange of India (NSE) said the markets regulator Securities and Exchange Board of India (Sebi) has rejected its plea to settle a matter about the alleged irregularities in its co-location (colo) facility.

The exchange filed the settlement application in response to a show cause notice issued by Sebi in May 2023. It also filed a detailed response to the notice in August 2023.

“Sebi vide its letter dated December 18, 2023, has rejected the settlement application filed by the NSE. The personal hearing in the matter has been concluded on February 2, 2024, and the order of Sebi is awaited,” NSE said.

In January 2023, the Securities Appellate Tribunal (SAT) set aside a disgorgement order by the market regulator against NSE in the colo matter.

However, it had allowed inquiry into the charge of connivance and collusion of OPG Securities with the employees and officials of NSE. The settlement application pertains to this issue.

In 2019, Sebi had directed NSE to disgorge Rs 625 crore for the alleged violations. While setting aside the order, SAT had directed the NSE to deposit Rs 100 crore for the lack of due diligence.

The market regulator refunded Rs 300 crore to the exchange following the directions by the Supreme Court in the same case.

According to market and legal experts, NSE needs to resolve its pending litigations before it can move ahead with its much-awaited initial public offering (IPO).

In December 2023, SAT quashed an order by Sebi against NSE and former top bosses Chitra Ramkrishna and Anand Subramanian in the ‘dark fibre’ case where certain brokers allegedly exploited the exchange’s internet infra to get faster connectivity for colo facilities.

The tribunal also reduced the penalties on Ramkrishna and Subramanian.

NSE disclosed that proceedings in Sebi's orders on governance and conflict of interest matters are pending a final hearing before the SAT.

Among other cases, the preferential access to tick-by-tick data at the colo facility is pending before the Supreme Court.

Sebi had filed an appeal against the SAT order, which set aside the penalty of Rs 1 crore on the NSE.

The appeal on the January 2023 order of SAT is also pending before the apex court.

NSE had also filed a settlement application in a matter related to the alleged misuse of trading access point (TAP) software on which an update is awaited.

Co-lo Saga

 In January 2023, SAT set aside Rs 625 cr disgorgement order by Sebi; imposed Rs 100 cr penalty
 Tribunal had allowed enquiry into the charge of connivance of OPG Securities with officials of NSE
 Sebi issued showcause in May 2023, NSE filed settlement application for the same
 Sebi rejected settlement plea in December 23, personal hearing concluded on February 2, 2024
 Several pleas pending at SC in Colo-related matter

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First Published: Feb 13 2024 | 6:06 PM IST

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