The Securities and Exchange Board of India’s (Sebi) ruling penalising the National Stock Exchange (NSE) in the co-location issue with a fine of Rs. 1 crore was overturned by the Securities Appellate Tribunal (SAT) on Monday.
A 25 lakh penalty levied against the former NSE directors Ravi Narain and Chitra Ramakrishna has also been overturned by the tribunal.
The co-location case concerns the claimed privileged access granted by NSE to a select group of brokers to frequently connect to its secondary servers.
In his order issued in 2019, Sebi’s full-time member accused the National Stock Exchange of failing to ensure, among other things, that trading was fair, transparent, and open and demanded that the exchange return 625 crore.
The Sebi member had also asked Narain and Ramakrishna to disgorge 25% of their salary and debarred them from being associated with any listed company or market infrastructure institution. In January this year, securities appellate tribunal set aside Sebi’s order against NSE and its two former chiefs.
However, it required NSE to contribute 100 crore to the investor protection and education fund of the Sebi. The adjudication officer (AO) of Sebi issued decisions against NSE and its two former chief executives based on the same issue and the same cause of action, according to the Securities Appellate Tribunal.
“In our view, a violation cannot be subject to two punishments. The two-member bench led by Justice Tarun Agarwala stated, “Since we had already imposed a penalty of 100 crore upon NSE…which in our opinion is more than sufficient.
The SAT stated on the fine imposed on Narain and Ramakrishna: “We find that no further directions are required to be issued and the imposition of penalty in the circumstances is unwarranted.” However, while affirming the violations by broking firm OPG Securities, the tribunal has asked Sebi to reconsider the quantum of penalty.
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