The Supreme Court on Monday directed the Securities and Exchange Board of India (SEBI) to return the money 300 crore deposited by the National Stock Exchange (NSE) as part of the decommissioning order. However, the refund is contingent upon the exchange agreeing to return the amount along with interest if SEBI wins the appeal in the co-location scam case.
The court also issued notice to NSE on Sebi’s plea challenging the January 23 order of the Securities Appellate Tribunal (SAT). Questioning the speed of SEBI’s probe, the apex court asked whether it had been sleeping for so long. Now the matter will be heard in September.
Under the co-location services, some brokers trading from the same premises where NSE’s algorithmic trading servers were located could get faster access to the trading system, thereby gaining an unfair advantage over others.
On January 23, SAT set aside SEBI’s 2019 order to degorge NSE. 624.89 crore in the alleged co-location scam. In fact, reduced the penalty to one-sixth the appellate tribunal asked NSE to pay 100 crore towards the Investor Protection and Education Fund of SEBI for the lapses related to the secondary server.
A bench headed by Justice Tarun Agarwal and Justice MT Joshi of the Appellate Tribunal said, “Even though NSE has not indulged in any unethical act or enriched itself, in our opinion, the direction of separation is not sustainable.” Might.” order.
Following the appellate court’s order, SEBI approached the Supreme Court against the SAT order.
In April 2019, SEBI ordered the seizure of NSE approx. 1,044 crore, which meant withdrawal of 624 crores at 12% interest since 2014.
SEBI barred the exchange from accessing the market for funds for the next six months due to alleged lapses in high-frequency trading provided through its co-location facility. Besides this, the market regulator has appointed Chitra Ramakrishna, former Managing Director and Chief Executive; and Ravi Narayan, a former vice-chairman, to forgo 25% of his salary, but the order was later quashed by the SAT.
Stock market on 10 February 2021 after three years of investigation
regulator fined 25 lakh each on Ramakrishna and Narayan and 1 crore on NSE.
Meanwhile, in its judgment on January 23, the SAT specifically criticized the conduct of the markets regulator.
“We find that SEBI adopted a slow approach and was, in fact, putting a protective cover over the alleged misdeeds of NSE. The SAT order states that it was only after the question was tabled in Parliament that SEBI woke up and started an investigation.
The appellate tribunal said that considering the seriousness of the alleged allegations, SEBI should have investigated them instead of handing them over to NSE.
“It is strange, and not in keeping with the logic, of how SEBI directed NSE to conduct an investigation against itself. In the 235-page order, the tribunal said, it is clear that a casual approach was adopted.
Besides this, SAT also said that when serious allegations were leveled against the first level regulator – NSE – SEBI should have been proactive and investigated seriously.
The alleged scam came to light in 2015 after three written complaints by a whistleblower alleged that some traders got preferential access to the NSE’s co-location facility.
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