NSE ‘dark fibre’ case: Sebi clears former MD Ravi Narain, 8 others

The Securities and Exchange Board of India (Sebi) on Thursday exonerated nine current and former officials of the National Stock Exchange (NSE), including former MD and CEO Ravi Narain, saying they cannot be held responsible for any misconduct or non-compliance in the ‘dark fibre’ issue of the co-location (colo) case. Former officials who have been absolved from the charges are the exchange’s senior VP (operations) R Nandakumar, colo head Jagdish Joshi, CTOs N Muralidharan and Ravi Apte. The current officials who have been exonerated are its chief operating officer (Trading) Mayur Sindhwad, CTO-projects Sankarson Banerjee, CTO-operations G Shenoy and VP-Regulations Suprabhat Lala. The order, issued by Sebi Whole-time Member SK Mohanty, came after an investigation by Sebi against several former and current NSE employees and stock brokers in the colo case. Sebi had received complaints that certain stock brokers were permitted to avail of Point to Point (P2P) dark fibre connectivity from Sampark Infotainment Private Limited a non-empanelled service provider, and the P2P connectivity provided by Sampark conferred a latency advantage to a few brokers, which resulted in a substantial rise in their turnover in April-August 2015. “Based on the evidences available on record and after having considered the same, it can’t be held that the noticees (9 former and current officials) were involved in facilitating Sampark to lay down the dark fibre line to provide P2P connectivity. There is also no evidence to suggest that noticees had any role in modifying the Circular of 2009 in the year 2013,” the Sebi order said. Consequently, they were also not responsible for the non-transparent dissemination of the modification so made in the above mentioned Circular of 2009 and therefore, the noticees cannot be held responsible for any misconduct or non-compliance as far as laying of P2P connectivity using dark fibre is concerned, the Sebi order said. The noticees said the dark fibre team was not reporting to them at any point of time during their tenure as employees or consultants of NSEIL and there is nothing on record or in the show-cause notice to substantiate such attribution, Sebi said. While granting permission to stockbrokers for establishing P2P connectivity from its colo facility with the help of Sampark, the NSE allegedly adopted a discriminatory approach towards large number of other stockbrokers by allowing Sampark’s services to be availed by only select stock brokers. It has been alleged that the NSE had not acted in a fair and equitable manner while dealing with its members and these nine officials were allegedly employed at top posts of the exchange during the period. Sebi has disposed of the proceedings initiated against the officials by exonerating them from the allegations charged against them. In May 2019, Sebi found the NSE and former CEOs Narain and Chitra Ramkrishna guilty of not ensuring fair and equitable practices while putting in place the tick-by-tick trading architecture. In its 104-page order on the colo case, Sebi directed that 25% of the salary of Narain be disgorged for the period 2010-11—2012-13 and that 25% of the salary of Ramkrishna be disgorged for 2014-15. It barred the NSE from accessing the securities markets directly or indirectly for six months and said it must disgorge an amount of Rs 624.890000000 within 45 days. However, Sebi said there wasn’t sufficient evidence available to conclude that NSE had “committed a fraudulent and unfair trade practice as contemplated under the Sebi Regulations”.