Last Modified: Fri, Mar 09 2018. 05 02 AM IST

NSE IPO delayed as Sebi returns settlement plea in algo-trading case

Sebi has asked NSE to re-file the consent plea in the co-location issue once a probe on suspected unfair gains made by select brokers is over

The NSE IPO is now likely to be delayed till 2019. Photo: Aniruddha Chowdhury/Mint
Jayshree P. Upadhyay

Mumbai: National Stock Exchange of India’s (NSE’s) much anticipated initial public offering (IPO) is likely to be pushed to 2019 after the market regulator sent back its consent plea on the so-called co-location issue, the bourse said in a statement. The Securities and Exchange Board of India (Sebi) has asked NSE to re-file the consent plea once a probe on suspected unfair gains made by select brokers is over, it added.

The co-location issue refers to allegations that NSE had provided unfair access to its algo-trading systems to some brokers who had their servers on the exchange’s premises. A consent plea allows entities to settle charges by paying a penalty without admission or denial of guilt.

“As stated earlier, the timeline of the IPO (Initial Public Offer) is dependent on the resolution of the regulatory matters with Sebi and we are hopeful we will be able to do the IPO in fiscal 2019,” the NSE statement said.

One person involved in the NSE IPO said the shareholders and other stakeholders were aware of ongoing probe and the possibility of delay in the IPO.

“We would have liked the IPO to be sooner but we always knew it was dependent on the outcome of the probe. Sebi has not rejected the consent plea but asked NSE to re-file once the probe is complete. And the valuations would continue to depend on future prevalent market conditions and probe findings,” said this person on condition on anonymity. 

Sebi decided to return the consent plea because it is yet to complete its probe on 22 brokers for suspected unlawful gains they made because of getting unfair access, said a person close to the development. Typically, in situations where an investigation is pending, Sebi does not allow consent or settling charges, Mint had reported on 5 September.

Sebi’s investigation into the unfair access issue consisted of two parts. First, the regulator examined whether NSE systems were prone to manipulation and allowed unfair access. It finished this last year and issued show cause notices to the bourse and 14 of its officials on 22 May.

Second, Sebi wanted to determine unlawful gains allegedly made by 22 brokers and whether there was any collusion with NSE officials. For this, it had appointed Deloitte Touche Tohmatsu India Llp and EY India in August for a joint audit of the exchange’s algorithmic trading systems and the 22 brokers. 

“Sebi has given the two auditors till the end of this month to complete the audit. Auditors can seek an extension if required,” said a person close to the matter. “Sebi is looking to finish the probe by first quarter of fiscal 2019,” he added.

Topics: NSENSE IPOSebiNSE algo-trading caseco-location case

First Published: Fri, Mar 09 2018. 02 33 AM IST

Latest News »