Co-location: SAT asks NSE to transfer ₹625 cr. to SEBI

The Securities Appellate Tribunal (SAT) has given a partial relief to the National Stock Exchange (NSE) in the co-location matter by directing the bourse to transfer ₹6250000000 to the Securities and Exchange Board of India (SEBI) within two weeks. While hearing the appeal filed by the exchange, the tribunal on Wednesday said that the amount would be kept in an interest bearing account till the matter was disposed while giving the capital market watchdog six weeks’ time to file its reply. This would come as a partial relief to the exchange, which was ordered to disgorge a total of nearly ₹1,1000000000 for its alleged failure to exercise proper due diligence while offering co-location facility thereby affecting market fairness and integrity. On April 30, the SEBI barred the NSE, which has the largest market share in the equity segment and almost a monopoly in equity derivatives, from accessing the securities market for six months. The regulator further ordered the exchange to disgorge about ₹1,1000000000, which included the alleged profit of ₹6250000000 from the co-location operations along with 12% p.a. interest from April 2014. “... NSE has committed a fraudulent and unfair trade practice as contemplated under the SEBI (PFUTP) Regulations, I find that it is established beyond doubt that NSE has not exercised the requisite due diligence while putting in place the tick-by-tick architecture,” the SEBI had said.