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nse: Sebi bars NSE from accessing securities market for 6 months in co-location case

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The exchange will not be able to come out with its IPO during this period.

"NSE has committed and fraudulent and unfair trade practice as contemplated under the SEBI (PFUTP) Regulations. It is beyond doubt that NSE has not exercised the requisite due diligence while placing the TBT architecture, "G Mahalingam, a member of Sebi said in the order.

Tick-by-Tick (TBT) is a data feed that provides information on every change in the order book on the NSE.

The regulator also has an exchange rate of Rs 624,89 crore along with an interest of 12 per cent per annum of the Sebi Investor Protection and Education Fund (IPEF).

NSE earned Rs 624.89 crore during 2010-11 to 2013-14 from its co-location operation.

Responding to Sebi order, and spokesperson for NSE said, "NSE is in the process of examining SEBI Order passed today and will take appropriate steps as may be legally advised."

The exchange has also been directed to audit its systems at frequent intervals. NSE now also cannot introduce any new derivative product in stocks or commodities for the next six months.

Commenting on the order and NSE spokesperson said: "NSE is in the process of examining Sebi order, and will take appropriate steps as may be legally advised."

Sebi has also issued orders against 16 individuals, including former managing directors and CEOs of Ravi Narain and Chitra Ramkrishna.

Narain and Ramkrishna have been ordered to disgorge 25 per cent of their salary drawn for FY11 to FY13 and 25 per cent of the salary drawn for FY14, respectively, to the IPEF within the next 45 days.

Both these former officials have been banned from associating with a listed company or market infrastructure institution or any other market intermediary for five years.

The co-location case dates back to 2015, when whistleblower wrote a letter to Sebi alleging that the NSE gave preferential access to a few high-frequency traders and brokers to the exchange's trading platform.

The whistleblower snake alleged that some people had figured out that way to the game system would be the first one to connect to the server and preferably the server, which was the fastest.

Experts were the view that was fair.

“I think the order is fair. The integrity of capital markets is important, ”said Shriram Subramanian, founder of InGovern, and proxy advisory firm.

Subramanian said the NSE will not be able to invest in securities market or come up with an IPO over the next six months.

“There were digital footprints. This was long expected. The only thing that Sebi might have figured out was that the knowledge of former MDs, he added.

In his order on Tuesday he also asked NSE to initiate an inquiry under his staff regulations against Mahesh Soparkar and submit a report to the regulator within six months.

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