SEBI Bans NSE From Capital Markets For Six Months In Co-Location Scam; Imposes Rs 624.89 Crore PenaltyA trader at his desk viewing stock prices. (Indranil Bhoumik/Mint via Getty Images)

India’s securities regulator SEBI on Tuesday (30 May) debarred the country’s largest stock exchange NSE from accessing the capital markets for six months and imposed a massive fine of Rs 624.89 crore for giving preferential access and speed to specific traders over others, reports Economic Times (ET).

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

Tick-by-Tick (TBT) refers to the data feed which informs traders regarding every change in NSE’s order book.

According to the Securities and Exchange Board of India's (SEBI) estimates, National Stock Exchange (NSE) netted a profit of Rs 624.89 crore during 2010-11 to 2013-14 from its co-location scam.

Preferential Access

The NSE co-location scam relates to allegations of market manipulation at NSE by some members of the exchange by front running other members through faster access to market price information. The allegations first surfaced after a whistle-blower wrote a letter in 2015 on the modus operandi of the market manipulation.

The regulator has further directed the exchange to deposit the fine with an interest of 12 per cent per annum to its Investor Protection and Education Fund (IPEF).

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

Also Read: SEBI To Probe September Stock Market Crash Over Suspicion Of ‘Bear Cartel’ Involvement, Claims Report

An Appeal...

Dear Reader,

As you are no doubt aware, Swarajya is a media product that is directly dependent on support from its readers in the form of subscriptions. We do not have the muscle and backing of a large media conglomerate nor are we playing for the large advertisement sweep-stake.

Our business model is you and your subscription. And in challenging times like these, we need your support now more than ever.

We deliver over 10 - 15 high quality articles with expert insights and views. From 7AM in the morning to 10PM late night we operate to ensure you, the reader, get to see what is just right.

Becoming a Patron or a subscriber for as little as Rs 1200/year is the best way you can support our efforts.

Become A Patron
Become A Subscriber