BackSebi imposes ₹7 cr penalty on NSE, ₹5 cr each on Chitra Ramakrishna, Subramanian in dark fibre case
Sebi levied a penalty of ₹7 crore on NSE in dark fibre case. In the case, a total of 18 entities received penalties.
PremiumMarket watchdog Sebi has imposed a penalty of ₹7 crore on the stock exchange, NSE in the dark fibre case. A penalty of ₹5 crore each is levied on former NSE officials Chitra Ramakrishna and Anand Subramanian. In this case, a total of 18 entities received penalties.
A penalty of ₹6 crore was imposed on Way2Wealth Brokers, meanwhile, ₹5 crore was slapped on GKN Securities, and ₹3 crore on Sampark Infotainment.
Ravi Varanasi also faced a penalty of ₹5 crore.
Sebi imposed ₹1 crore penalty each on Nagendra Kumar SRVS, Deviprasad Singh, and R Shashibhushan. Further, ₹1.1 crore penalty each was imposed on Prashanth D'souza, Om Prakash Gupta, Sonali Gupta, and Rahul Gupta. Also, Rima Srivastava, Parshant Mittal, and Mohit Mutreja faced a penalty of ₹10 lakh each.
NSE and its former officials including other entities have been under Sebi's radar over alleged irregularities.
Sebi earlier had formed a cross-functional team of officials to examine complaints alleging irregularities in the matter of co-location and corporate governance at NSE.
During this process, Sebi received another complaint that alleged irregularities with respect to certain brokers availing point to point dark fibre connectivity from Sampark Infotainment. Thereby, the regulator constituted an expert committee to examine the issue.
Sebi's investigation focused on the alleged connivance/collusion of NSE's employees (past and current) with stock brokers (including their past and current employees) during the Investigation period. Further, it focused on the role of stock brokers alleged to have benefited from preferential access to the exchange's system, including quantification of gains of the stock brokers, to the extent possible, from such mechanism.
In the investigation, it was alleged that Sampark arranged the cabling in the co-location rack of NSE in such a manner that some stock brokers, Way2Wealth Brokers, and GKN Securities had lower latency compared to other trading members connected to the Sampark Multiplexer placed in NSE Meet Me Room.
That said, the investigation revolves around alleged preferential treatment meted out by NSE to W2W and GKN by allowing them to utilize the services of Sampark for laying of Dark Fibre cable for P2P connectivity despite Sampark not having the requisite license from the Telecom department.
Meanwhile, the cable was laid by Sampark in such a manner (directly at the rack of the broker at the exchange) that it resulted in W2W and GKN having a latency advantage over other brokers which were not availing the services of Sampark or who when applied to NSE for allowing them to engage Sampark for providing P2P connectivity were denied by NSE, as per Sebi document.
"Such an unfair advantage available with certain Stock Brokers is in contradiction to various regulations, recommendations and circulars issued in relation to the Colo facility emphasize on providing equal, unrestricted, transparent and fair access to all the brokers and all the participants without any bias or favor," Sebi said.
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