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    Co-location case: Sebi directs NSE to disgorge Rs 624.89 crore with 12% interest; bars exchange from securities market for 6 months

    market | IST

    Co-location case: Sebi directs NSE to disgorge Rs 624.89 crore with 12% interest; bars exchange from securities market for 6 months

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    The country's largest stock exchange has also been barred from accessing the securities market directly or indirectly for six months. Ravi Narain and Chitra Ramkrishna -- who had served as MD and CEO of the exchange -- have been prohibited from "associating with a listed company or a market infrastructure institution or any other market intermediary for a period of five years".

    Markets regulator Securities and Exchange Board of India (Sebi) on Tuesday directed NSE to disgorge Rs 624.89 crore with 12 percent interest from April 1, 2014, and barred leading stock exchange from the securities market for 6 months in co-location case.
    The order said that NSE did not exercise due diligence while putting in place Tick-by-Tick (TBT) architecture and told the exchange to frequently carry out system audits.
    According to Sebi order, the disgorged amount has to be deposited in investor protection and education fund within 45 days from date of the order by demand draft.
    Further, Sebi has found two former NSE managing directors Ravi Narain and Chitra Ramkrishna guilty in co-location case and prohibited both from associating with listed company/market infrastructure for a period of 5 years.
    Also, Narain has to disgorge 25 percent of salary drawn for FY11 to FY13 and Ramkrishna shall disgorge 25 percent drawn for FY14.
    In 2015, a whistleblower wrote a letter to Sebi alleging that NSE gave preferential access to a few high-frequency traders and brokers to the exchange’s trading platform.
    The Sebi has been probing the alleged lapses in high-frequency trading offered through NSE's co-location facility. It was also investigating whether some brokers had unfair access to the exchange's co-location facility.
    NSE's co-location facility allows low latency and fast execution to trading members. This setup of server gives a 10: 1-speed advantage in comparison to other brokers.
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