sebi:WTM/SKM/EFD1-DRAIII/16/2019-20
This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.
Facts / Headnote
Directions issued against NSE and other noticees including monetary deposits to IPEF, debarments from holding positions in SEBI-registered entities, prohibitions on accepting new clients and proprietary trading, and mandates for audits and documented policies.
Provisions invoked
- s. 11
- s. 19
- s. 11(1)
- s. 11B
- s. 12A
- s. 12
- s. 11(2)
- s. 27
- s. 141
- s. 25
- s. 2(51)
- s. 2(60)
Regulations
- Reg. 3
- Reg. 4
- Reg. 4(1)
- Reg. 26(1)
- Reg. 26(2)
- Reg. 2
- Reg. 9
- Reg. 3(d)
- Reg. 41
- Reg. 49
- Reg. 2(1)(b)
- Reg. 2(i)
- Reg. 69
- Reg. 52(2)
Holding
NSE and its officials, along with stock brokers W2W and GKN and service provider Sampark, were found to have violated SEBI regulations by granting preferential and discriminatory access to NSE's co-location facility through unauthorized P2P connectivity provided by Sampark without requisite DoT license, and directions including monetary penalties and debarments were issued.
Full text
Page 2 of 202 Background 1. The Securities and Exchange Board of India (hereinafter referred to as “SEBI”) received complaints from a whistle-blower dated January 08, 2015 and August 10, 2015 alleging various irregularities in respect of Co-location (hereinafter referred to as “Colo”) facility provided by National Stock Exchange of India Ltd. (hereinafter referred to as "NSE"). Accordingly, a Cross Functional Team (CFT) of SEBI officials was constituted to undertake a preliminary fact finding of the various irregularities alleged in these complaints.
Page 3 of 202 3. Based upon the preliminary findings of CFT and the subsequent complaint dated October 03, 2015 received by SEBI and on the basis of recommendation of the Technical Advisory Committee of SEBI (hereinafter referred to as “TAC”), an ‘Expert Committee’ was constituted for further examination of the
Page 4 of 202 (Regulation) Act, 1956 (hereinafter referred to as “SCR Act, 1956”) and/ or the Rules and the Regulations made there-under such as SEBI (Stock Exchanges and Clearing Corporations) Regulation, 2012 (hereinafter referred to as “SECC Regulations, 2012”), SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (hereinafter referred to as “PFUTP Regulations, 2003”) and SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992 (hereinafter referred to as “Stock Broker Regulation”) pertaining to dark fiber connectivity provided by Sampark in connivance / collusion of NSE's employees (past and current) with stock brokers and role of stock brokers alleged to have been benefited from the aforesaid preferential access to the exchange's Colo facility by way of P2P connectivity taken from an un-authorized service provider.
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Source: SecMarx — sebi:WTM/SKM/EFD1-DRAIII/16/2019-20. 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.