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Thursday, March 04, 2021

Co-location case: Sebi fines NSE, Narain, Ramakrishna

NSE failed to provide a level playing field for members subscribing to its TBT data feed system, the Sebi order said.

By: ENS Economic Bureau | New Delhi |
February 11, 2021 1:22:08 am
The adjudication by Sebi has concluded that NSE failed to provide a level playing field for members subscribing to its tick-by-tick (TBT) data feed system.

The Securities and Exchange Board of India (Sebi) on Wednesday levied a penalty of Rs 1 crore on the National Stock Exchange (NSE) and Rs 25 lakh each on Chitra Ramakrishna, former MD of the stock exchange, and its former vice-chairman Ravi Narain, in connection with the three-year long investigation into the co-location case.

The adjudication by Sebi has concluded that NSE failed to provide a level playing field for members subscribing to its tick-by-tick (TBT) data feed system. This TBT data feed is used for algorithmic trading. Algorithmic trading, or ‘algo’ in market parlance, refers to orders generated at superfast speed by using advanced mathematical models involving automated execution of trade. Even a split-second faster access is capable of bringing huge gains to a trader.

In its 96-page order, Sebi said NSE failed to comply with provisions of Stock Exchange and Clearing Corporation (SECC) Regulations in “letter and spirit” and Ramakrishna and Narain are “vicariously liable for the acts of omissions/commissions committed by NSE during the investigation period”.

It said the conduct of NSE and Ramakrishna are “blameworthy being in defiance of the obligations casted under SECC Regulations”. “… the default is grave and the gravity of this matter cannot be ignored. Therefore, no lenient view should be taken and the case deserves imposition of monetary penalty…,” the order passed by adjudicating officer Amit Pradhan read.

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