NSE to function as an exchange despite SEBI orders

A day after market regulator Securities and exchange Board of India (Sebi) passed orders against the National Stock Exchange (NSE) in the case related to co-location of computer servers, the country’s largest stock exchange on Wednesday said the orders do not affect its functioning as a recognised stock exchange.

Sebi on Tuesday directed the National Stock Exchange to disgorge Rs624.89 crore with 12 per cent interest from 1 April 2014, and barred the exchange from the securities market for 6 months in a co-location case.
Together with interest, the total disgorgement amount would be more than Rs1,000 crore.
Sebi also barred NSE from launching any new derivative products as well as from accessing the securities market directly or indirectly for six months.
In its order the market regulator said NSE did not exercise due diligence while putting in place Tick-by-Tick (TBT) architecture and told the exchange to frequently carry out system audits.
"Normal trading on NSE in all segments will continue from Thursday, 2 May 2019. Wednesday, 1 May 2019 is a trading holiday on account of May Day," the bourse said in a statement.
Sebi's orders would not affect its functioning as a recognised stock exchange, the statement added.
The watchdog passed five separate orders, together running into 400 pages, related to the co-location case, wherein some entities allegedly got preferential access in high frequency trading.
Sebi also decided to take strict action against some present and past executives of the exchange and some stock brokers.
Further, Sebi has found two former NSE managing directors, Ravi Narain and Chitra Ramkrishna, guilty in co-location case and prohibited both from associating with listed company/market infrastructure for a period of 5 years.
Also, Narain has to disgorge 25 per cent of salary drawn for FY11 to FY13 and Ramkrishna shall disgorge 25 per cent drawn for FY14.
In 2015, a whistleblower wrote a letter to Sebi alleging that NSE gave preferential access to a few high-frequency traders and brokers to the exchange’s trading platform.
The Sebi has been probing the alleged lapses in high-frequency trading offered through NSE's co-location facility. It was also investigating whether some brokers had unfair access to the exchange's co-location facility.
NSE's co-location facility allows low latency and fast execution to trading members. This setup of server gives a 10: 1-speed advantage in comparison to other brokers.