Mumbai: The Bombay high court on Wednesday ruled against the National Stock Exchange (NSE) in a defamation case that the bourse had filed against financial news website Moneylife.
The court dismissed the case and asked the NSE to pay ₹ 1.5 lakh each to journalists Debashis Basu and Sucheta Dalal. Besides this, the court imposed a penalty of ₹ 47 lakh on NSE to be paid in the form of a donation to Masina Hospital and Tata Memorial Hospital in Mumbai.
The order is yet to be uploaded on the court’s website.
“The order is not yet officially out. We naturally welcome what we heard of the speaking order," said Basu, founder, editor and publisher of Moneylife.
“The motion is dismissed. Since we have not received the final copy from the court, we are not in a position to comment further. However, it goes without saying that, whatever is the court order, NSE will respect that," said an NSE spokesperson.
On 8 July, Dalal wrote an article on the website alleging that some NSE staffers were leaking sensitive data related to high-frequency trading or co-location to a select set of market participants so that they could trade faster than their competitors.
Her article was based on an alleged complaint made to the Securities and Exchange Board of India (Sebi) in January by an official of a Singapore-based hedge fund.
“I wish to draw your attention to a sophisticated market manipulation done at NSE for several years at NSE co-location. The most shocking aspect is that when the matter came to the knowledge of NSE management team, they have chosen to hush up the matter under the carpet rather than coming out in open against the same," said the letter addressed to B.K. Gupta, deputy general manager, Sebi.
“The market manipulation that I am referring to has been occurring by enabling certain vested brokers to get market price information ahead of the rest of the market and thus enabling them to front-run the rest of the market," it adds.
Co-location refers to bourses allowing members to set up automated trading systems on their premises to reduce the time required for orders to flow between the exchange and the broker’s trading system.
In response to the Moneylife article, NSE filed a defamation suit claiming damages of ₹ 100 crore in the Bombay high court.
“As you know, since inception, NSE has been maintaining a high degree of surveillance and integrity in its day-to-day operations, strictly adheres to the rules, regulations and guidelines issued by the regulators from time to time," an NSE spokesperson had said in an email response then.
You “cannot use defamation to gag the press", justice Gautam Patel had said while hearing the matter on 24 July. “How is it defamation when Ms Dalal sent you questions before publishing the article and you (NSE) chose not to respond to the query?" the judge had asked.