SAT allows SEBI two months time to file reply in NSE colocation case

The Securities Appellate Tribunal ( SAT ) has granted two months time to Securities and Exchange Board of India ( Sebi ) to reply to a plea filed by the National Stock Exchange (NSE) against the Rs 1,1000000000 penalty imposed.Earlier on May 22, in a partial relief to the exchange, the SAT had directed the exchange to transfer Rs 6250000000 to the Sebi in two weeks and has stayed the capital market regulator’s order till further instructions.NSE has challenged Sebi’s orders in co-location case before SAT with the exchange arguing that Sebi’s order is unsustainable, arbitrary and disproportionate.The appellate tribunal will hear the case on September 18.In April, Sebi had directed NSE to pay over Rs 1,1000000000 for favouring a few brokers to make illegal gains by using unauthorised trading software and networks in the same room where the exchange’s main trading servers were located. NSE was directed to deposit the amount to an investor protection fund in 45 days.However, the division bench of SAT presided over by Justice Tarun Agarwala, member CKG Nair and judicial member Justice MT Joshi had asked the bourse to keep the depositing its revenue from co-location facilities in an escrow account until further order.So far, NSE has deposited Rs 2,5000000000 in an escrow account as per Sebi’s directions. NSE's reserves and surplus as of March 2018 were Rs 7,2250000000.The tribunal has also directed the exchange to initiate a probe against its employees to investigate their involvement in granting preferential access to some brokers, but not to take any action based on the findings of the probe until further orders.So far, the appellate tribunal has given relief to 18 out of the 28 entities and personnel in the case. The market watchdog has been probing alleged lapses in high-frequency trading offered through NSE's co-location facility.Besides, the bourse’s two former chief executive officers -- Ravi Narain and Chitra Ramkrishna -- have been asked to shell out 25% of their respective salaries drawn during a certain period. They have also been barred from associating with a listed company or a market infrastructure institution or any other market intermediary for a period of five years’, Sebi had earlier said in a 104-page order.