MUMBAI: The National Stock Exchange (NSE) said it will challenge market regulator Sebi's order penalizing it in the co-location case.The decision to appeal before the Securities Appellate Tribunal (SAT) was discussed by the NSE board on May 16.The Company has received the orders passed by Sebi and has sought legal advice thereon.
Having regard thereto, the company believes that it has strong grounds to contest the above orders including monetary liability (including from adjudication proceedings) raised by Sebi, the NSE said in its consolidated financial statements for 2018-19 released after the board meeting.The company intends to file appeals before the Honble Securities Appellate Tribunal (SAT) against the orders passed by Sebi.
Accordingly, no provision for any liability in this regard is considered necessary in the financial statements for the year ended March 31, 2019.The move by the NSE comes at a time when most of the entities against whom Sebi has passed orders in the co-location case has got interim relief from the SAT.Last month, Sebi directed the NSE to pay Rs 687 crore and barred it from accessing the securities market for six months following investigations into the collocation of servers that gave an unfair advantage to some traders.
The case dates back to 2015, when a whistle blower wrote a letter to Sebi alleging that NSE, Indias largest stock exchange, gave preferential access to a few high-frequency traders and brokers to the exchange's trading platform.Co-location refers to a system where traders are allowed to place servers in close proximity to those of an exchange, helping faster execution of trades.NSE said the regulator has also separately initiated adjudication proceedings against it.Additionally, NSE has also received Adjudication notices covering the above three orders which are currently pending for hearing before Sebi," the exchange said.Three show cause notices were issued by the regulator to the NSE and to some of its employees, including former employees, in respect of the preferential access to tick by tick data in co-location facility, dark fibre point-to-point connectivity and corporate governance related issues.Along with interest, the penalty on NSE will likely add up to over Rs 1,000 crore.
NSE's reserves and surplus as on March 2018 were Rs 7,225 crore.I find that it is established beyond doubt that NSE has not exercised the requisite due diligence while putting in place the TBT (tick-by-tick) architecture, Sebi whole-time member G Mahalingam said in his 104-page order.
The same created a trading environment in which the information dissemination was asymmetric, which cannot be considered fair and equitable.693756016933930569243855