NSE Co-Location Case: SEBI Levies Fine on NSE, Ravi Narain and Chitra Ramakrishna

The Securities and Exchange Board of India (Sebi) levied a penalty of Rs 1 crore on NSE for its supposed failure to abide by the law of the stock exchange and the clearing corporation in the co-location case.

SEBI levied a penalty of Rs 1 crore on the National Stock Exchange (NSE) for failure to maintain a level playing field for trading participants who subscribe to its tick-by-tick (TBT) data feed scheme.

The Tick-by-Tick (TBT) data feed gives data on any modifications done in the order book.
The regulator imposed a fine of Rs 25 lakh each on former NSE managing directors and chief executive officers, Chitra Ramakrishna and Ravi Narain, according to the Sebi order.

From 2000 to March 2013, Ravi Narain served as the managing director and chief executive officer of NSE, and from April 2013 to December 2016, Chitra Ramakrishna served as MD & CEO of NSE.

Sebi faced allegations in 2015 alleging that a trading member of OPG Securities used the structure of NSE to its benefit by getting an agreement with NSE employees that made it link first. The first one to connect to the lowest load server will have the advantage of receiving data quicker than the rest.

"It is alleged that, during the relevant period of violations of NSE, the Noticee No. 2 (Ravi Narain) and 3 (Chitra Ramakrishna), who were in-charge of the affairs of NSE, have failed to take any step to ensure proper systems, checks and balances so as to provide fair and equitable access to all. The adherence to the principle of 'fair and equitable' was left to the technology team without any specific guidance. Thus, the Noticee No. 2 and 3 had failed to perform their role in establishing adequate systems leading to the scenario whereby certain brokers were allowed to breach the norms of fair and equitable access," Sebi said in its order.

The exchange thereby breached the rules of the Securities Contracts (Regulation) Laws or SECC requirements (Stock Markets and Clearing Corporations).

The regulator had ordered the exchange earlier in April 2019 to disgorge gains worth Rs 625 crore in the matter and placed a six-month moratorium on the launch of new derivative products.

GoodReturns.in