NSE Co-Location Case: SEBI Fines Exchange, Chitra Ramakrishna, 16 Others
Certain brokers, in collusion with the employees of NSE, made unfair gains, says the market regulator.
The market regulator has imposed penalties on 18 entities including National Stock Exchange and its former chief Chitra Ramakrishna in the co-location case.
The regulator fined the NSE Rs 7 crore under various provisions of the SEBI Act, according to an order uploaded on its website. SEBI imposed a penalty of Rs 5 crore each on Ramakrishna, Anand Subramanian, former group operating office at NSE; and Ravi Varanasi, chief business development officer at the exchange.
The penalty came in SEBI’s investigation into the dark fibre connectivity that allegedly allowed preferential access to certain stockbrokers.
This order is part of a multi-pronged investigation initiated by the SEBI against the bourse. In 2019, the market regulator had imposed a fine of Rs 90 crore on NSE. Last year, it had imposed a penalty of Rs 1 crore on NSE and Rs 25 lakh each on Ravi Narain and Chitra Ramakrishna.
The case emanates from complaints received by SEBI in 2015 which alleged that a trading member—OPG Securities—used NSE’s system to its advantage by having an arrangement with the exchange's staff. That, according to the complaints, helped OPG Securities gain preferential access to NSE’s backup servers. The allegations included certain brokers availing point-to-point dark fibre connectivity from Sampark Infotainment Pvt.
In its order, SEBI concluded that that Way2Wealth Brokers and GKN Securities, in collusion with the employees of NSE and Sampark, made significant profit due to unfair latency advantage available with them. They made unfair gains at the cost of other stock brokers who had complied with the guidelines and circulars of NSE, in this regard, the regulator said in its order.