NSE banned by SEBI from securities market for 6 months

Published on May 05, 2019
Market regulator, Securities and Exchange Board of India (SEBI) has banned NSE, National Stock Exchange from gaining access to the securities market for a period of 6 months.
NSE banned by SEBI from securities market for 6 months

Details:

  • SEBI also fined NSE a sum of Rs. 1,000 crore, that is, Rs. 624.89 crore and an additional 12% interest, from 1st April 2014 for NSE's failure to exercise effective due diligence during co-location facility.
  • The amount is to be deposited in the Investor Protection and Education Fund (IPEF).

What is the Co-Location Case?

  • It is a system in trade execution, where a broker's server is kept in the exchange premises to decrease latency or delay in computational terms.
  • SEBI got complaints against NSE in 2015, which stated that the computational systems that NSE used to distribute information through co-location facilities were partial and it allowed the users to extract data before the others could, thus creating a pool of information-imbalance among the users.

SEBI's say in the Co-Location Case:

  • NSE was charged guilty of fraud and unfair trade practice under the SEBI 'Prohibition of Fraudulent and Unfair Trade Practices' (PFUTP) Regulations.
  • NSE also affected market fairness by not exercising requisite due diligence while fixing the TBT (tick-by-tick data feed) architecture.
  • SEBI, having estimated that NSE had earned a profit of Rs 624.89 crore during 2010-11 to 2013-14 from its co-location operation, and ordered the former and the present top employees in the exchange-management to refrain from holding any position in the stock exchange for 2 to 3 years.

Question:

Q. Who has banned NSE, National Stock Exchange from gaining access to the securities market for a period of 6 months?
a. Stock Exchange Board of India (SEBI)
b. Share Market Board of India (SMBI)
c. Securities and Exchange Board of India (SEBI)
d. Stocks and Securities Board of India (SSBI)

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