Flash crash case: tribunal directs NSE to release payment in 2 weeks to Emkay

Our Bureau Mumbai | Updated on January 24, 2018 Published on March 27, 2015

‘Settlement is bona fide and is not violative of any provisions of SEBI/NSE’

The Securities Appellate Tribunal (SAT) has directed the National Stock Exchange to release payment to beneficiaries of trades it had withheld earlier. The payment has to be made within two weeks.

Nifty’s plunge, annulment

The case relates to annulment of trades executed on October 5, 2012.

On that day, the Nifty plunged nearly 900 points to a low of 4,888.2 disrupting trading in the exchange’s cash segment for nearly 15 minutes due to the execution of a Nifty basket sell order of ₹650 crore punched in by Emkay Global.

On October 29, 2012, the Disciplinary Action Committee constituted by the NSE imposed monetary penalty of ₹25 lakh on Emkay by holding that the trades executed on October 5 were the outcome of an error.

SAT’s earlier order

An application filed by Emkay Global seeking annulment of trades was rejected by an NSE order dated April 29, 2013. Aggrieved with the NSE order Emkay appealed to SAT. The tribunal then set aside NSE’s order on August 26, 2014, and directed the stock exchange to pass fresh order after hearing the concerned parties

After giving fresh hearing, the NSE standing committee passed an order on December 4, 2014. The said order of the committee had declined to take on record the settlement proposed by the parties and declined to release payment as per the settlement proposed by the parties (Emkay, Prakash K Shah and Inventure Growth and Securities.)

Following this Emkay and Prakash K Shah appealed to SAT challenging the order passed by the standing committee of NSE on December 4, 2014.

‘DAC can continue probe’

In an order late on Thursday, SAT said, “Since the settlement is bona fide and is not violative of any provisions of SEBI/NSE, without going into the question as to whether NSE had power to take settlement on record or not, in the peculiar facts of the present case, we direct NSE to take on record the settlement proposed by the appellants and release the withheld payment to the parties in terms of the settlement.”

“This order will not come in the way of the Disciplinary Action Committee in continuing the proceeding pending before it against the parties to the trades in question herein. Order of NSE dated December 04, 2014, impugned herein is modified accordingly to the extent set out hereinabove,” it added.

An NSE spokesperson said, “In this inimitable case, the annulment proceedings accordingly have come to an end. The payments according to the settlement plan, will not come in the way of disciplinary proceedings that may be considered by DAC separately.”

When contacted, Emkay Global spokesperson declined to comment.

Published on March 27, 2015
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