sebi:Order/AP/SK/2020-21/9375
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Facts / Headnote
Penalty imposed on NSE for contravention of Regulation 41(3) of SECC 2012 read with Regulation 38(2) of SECC 2018
Provisions invoked
- s. 15
- s. 15H
- s. 15I
- s. 15J
- s. 15F
- s. 28A
Regulations
- Reg. 7
- Reg. 4
- Reg. 3
- Reg. 2(1)
- Reg. 14
- Reg. 2
- Reg. 23
- Reg. 201
- Reg. 20
- Reg. 52
- Reg. 2(1)(a)
- Reg. 38(2)
- Reg. 41(3)
- Reg. 22
Parties
- National Stock Exchange of India Limited
Holding
NSE was found to have contravened Regulation 41(3) of SECC 2012 read with Regulation 38(2) of SECC 2018 by undertaking activities through itself and its wholly owned subsidiary NSICL that were unrelated or not incidental to its activity as a stock exchange, without obtaining SEBI's permission.
Full text
______________________________________________________________________________________ Adjudication Order in the matter of National Stock Exchange of India Limited Page 2 of 41 "NSE acquires 45% stake in CAMS" in the Business Standard dated December 24, 2013 stating that NSE through its subsidiary NSE Strategic Investment Corporation Ltd. ("NSICL") had acquired 45% stake in CAMS (SEBI registered RTI & STA agent primarily catering to Mutual Funds) in December 2013.
______________________________________________________________________________________ Adjudication Order in the matter of National Stock Exchange of India Limited Page 3 of 41 Sr. no . Exchange/Exc hange Subsidiary name Entity name in which stakes/shares/righ ts acquired Date of acquisiti on / Incorpor ation % of acquisitio n Details Whether NSE* is Promoter? Directorship nominated by NSE * as on Acquisition/Incorp oration Directorship (as on October 30, 2019) nominated by NSE* 3 NSE NSEIT Limited 29-Oct- 1999 100% Subsequent to the acquisition NSE transferred its stake to its subsidiary NSICL on 30-06- 2013 Yes Mr. R.H. Patil Mr. Ravi Narain Mr. Satish Naralkar Mr. J. Ravichandran Mr. Yatrik Vin Mr. Muralidaran Krishnaswami 4 NSE NEIL 01-Apr- 2012 25.05% Subsequent to the acquisition NSE transferred its stake to its subsidiary NSICL on 30-09- 2013 Yes (jointly IDBI and UTI originally).N ow, no longer a Promoter. Mr. Ravi Narain Mr. J Ravichandran 5 NSE MSIL 30-Nov- 2011 30% Subsequent to the acquisition NSE transferred its stake to its subsidiary NSICL on 28-03- 2013 No None None 6 NSICL; a wholly owned subsidiary of NSE RXIL 25-Feb- 2016 30% Yes jointly with SIDBI Mr. Mukesh Agarwal Mr. Tarun Aiyar Mr. Mukesh Agarwal Mr. Ketan Gaikwad
______________________________________________________________________________________ Adjudication Order in the matter of National Stock Exchange of India Limited Page 4 of 41 (iii) PXIL has been recognized by CERC as a Power Exchange for the purpose of providing the platform for Power Trading. Its activities are predominantly akin to the activities of a Stock Exchange except that instead of providing a platform for Trading in securities, it provides a platform for trading in power with a physical settlement facility. Hence, the activities are related to the activities of a Stock Exchange. (iv) Moreover, the term ‘engaged in’ has not been defined or explained in the SECC Regulations. However, based on various legal pronouncements, the term is interpreted to mean ‘to signify continuous occupation or employment and involved the concept of continuity of action as well as physical participation with full devotion of time, attention and efforts’. The same is not applicable in the current case as explained above. (v) Investment is currently held through a separate investment subsidiary of NSE and not by NSE. (vi) NSE is in compliance of Regulation 41(3) of SECC Regulations in respect of our investment in PXIL. (vii) PXIL was jointly promoted by NSE along with NCDEX in 2008 prior to advent of SECC Regulations in
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Source: SecMarx — sebi:Order/AP/SK/2020-21/9375. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.