NSE co-location matter: SAT to take up hearing on Wednesday

PALAK SHAH Mumbai | Updated on December 10, 2019

The National Stock Exchange (NSE) co-location matter in which brokers are alleged to have got preferential access to the trading systems of the bourse, will come up for hearing in the Securities and Appellate Tribunal (SAT) on Wednesday.

Present and former top executives of NSE, have made a plea to SAT to direct SEBI to set aside its order. NSE’s appeal against SEBI’s Rs 1,000-crore disgorgement order against it will also be heard by SAT.

The tribunal will hear matters involving the SEBI order against NSE’s former MD and CEO Ravi Narain, Chitra Ramakrishna, and other executives, including Ravi Varanasi, Suprabhat Lala, Mahesh Soparkar, Deviprasad Singh, and Nagendra Kumar SRVS.

The matter involving Ajay Shah, former Finance Ministry consultant, and Infotech Financials will also be heard. The tribunal had issued an interim stay on the SEBI orders against NSE and all its executives in the matter. SAT will also be hearing matters involving brokers OPG Securities, GKN Securities and Way2Wealth.

Narain was asked by SEBI to deposit 25 per cent of his salary drawn between financial years 2011-2013, when he was NSE’s MD and CEO, for violation of the code of conduct that led to the co-location issue at the exchange. SEBI barred Narain from associating with markets or companies in any way for two years. The charges against both Narain and Ramakrishna were similar. SEBI found some NSE executives guilty of colluding with stockbrokers, Way2Wealth Brokers and GKN Securities, leading to the latter gaining an unfair advantage over other brokers in the price feed at the NSE. SEBI had barred three NSE officials from holding any position with any stock exchange, clearing corporation, depository and any intermediary registered with it for two years. Varanasi was barred from holding a position in any listed company for three years.

SAT also stayed proceedings against Ajay Shah, Infotech Financial Services, its two company directors Sunita Thomas and Krishna Dagli, as well as NSE’s senior official, Suprabhat Lala, in the co-location case. SEBI charged them with violation of the Prevention of Fraudulent and Unfair Trade Practices for alleged data breach.

Shah, a senior academic with government think-tank, the National Institute of Public Finance and Policy, along with his wife and sister-in-law, misused market data obtained from NSE for commercial gains, SEBI had concluded. SAT observed in its order that the matter involving Shah and others dated back to 2009, and there were no complaints against them in those 10 years, and therefore, the balance of convenience was in their favour.

The three brokerage firms that gained unfair access to NSE’s systems were also granted interim relief by SAT. These brokers — OPG Securities, Way2Wealth Brokers and GKN Securities — have to deposit 50 per cent of the disgorgement amount as security.

Published on December 10, 2019

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