Mumbai: The National Stock Exchange (NSE) will have to pay ₹100 crore in penalties to capital markets regulator SEBI (Securities and Exchange Board of India) for lapses in a case registered in May 2018 in relation to an alleged co-location trading scam at the bourse.
The Securities Appellate Tribunal (SAT) on Monday slashed the disgorgement order of ₹625 crore in the NSE co-location case. Instead, the NSE was asked to pay ₹100 crore towards SEBI’s investor protection fund for its failure on the due diligence front.
The order also stated that the stock exchange did not make any illicit gains in the co-location case.
“The direction to disgorge must be in relation to any transaction or activity which is in contravention of the provisions of the SEBI Act or its regulations. The directions to disgorge can be done when its found to be engaged in illegal acts, and not necessarily in every case should a direction to disgorge be passed, because some provisions of the Act have not been adhered to,” SAT said.
The co-location scam refers to misuse of NSE’s high-tech trading infrastructure.
In 2019, SEBI passed a series of orders against the NSE and its former chief executives, Chitra Ramkrishna and Ravi Narain, alleging that the exchange 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.
SEBI had ordered the NSE to deposit nearly ₹1,100 crore, including interest, in an investor fund and barred it from raising money on the securities market directly or indirectly for six months.
It had also asked Narain and Ramkrishna to return 25% of the salaries they had received during the relevant period.