OPG gets relief in co-location case as NSE withdraws show cause notice

The National Stock Exchange (NSE) has withdrawn the show-cause notice it had issued against OPG Securities in the co-location case. In February 2017, NSE had issued the show-cause notice to OPG, the prime accused in the co-location case, on the basis of a SEBI order passed on similar ground. The show-cause accused OPG of connecting to the “fall back servers” of the exchange to gain faster market access despite several warnings to disconnect. OPG, in turn, said it had requested the exchange to grant permission to use the secondary server when the primary server was facing problems. Closing its case against OPG, NSE — in its recent communication dated September 12 — said it found that legal difficulties would arise in the disposal of the matter on merits. This was because there was a SEBI investigation against other brokers also in all segments on the exchange while the order against OPG pertained to specific segments only. “The committee (appointed by NSE to look into the case) observed, noticee is one among said 28 stock brokers. The committee also noted that investigation by SEBI against 28 stockbrokers is in relation to connection to “secondary server” for all the segments on the exchange, whereas the order of the then (NSE) committee was only with respect to futures and options segment. The committee finds from the developments belatedly brought to its notice, indicates for the first time ‘the prudent and legal difficulties’ that would arise in the event of a ‘de novo’ (starting from the beginning) disposal of the matter on merits,” the NSE said in the order. OPG’s argument has been that the NSE had no law or provision to deal with monitoring of connections to secondary servers and disciplinary proceedings can be initiated only if there is a legal provision. “Whereas the warnings given by the exchange were not basis a legal provision,” OPG argued. NSE said its committee was also apprised by OPG of an order by the Securities and Appellate Tribunal giving an interim stay on SEBI order, which held OPG responsible for connecting to secondary servers. SEBI had imposed dislodgement of illegal gains of Rs 15.570000000 on OPG and barred it from accessing markets for five years. NSE committee was led by Dharmistha Raval, Naved Masood, Vikram Limaye and J Ranganayakulu.