Current Affairs

NSE banned by SEBI from securities market for 6 months

Market regulator, Securities and Exchange Board of India (SEBI) has banned NSE, National Stock Exchange from gaining access to the securities market for a period of 6 months.
NSE banned by SEBI from securities market for 6 months

Details:

  • SEBI also fined NSE a sum of Rs. 1,000 crore, that is, Rs. 624.89 crore and an additional 12% interest, from 1st April 2014 for NSE's failure to exercise effective due diligence during co-location facility.
  • The amount is to be deposited in the Investor Protection and Education Fund (IPEF).

What is the Co-Location Case?

  • It is a system in trade execution, where a broker's server is kept in the exchange premises to decrease latency or delay in computational terms.
  • SEBI got complaints against NSE in 2015, which stated that the computational systems that NSE used to distribute information through co-location facilities were partial and it allowed the users to extract data before the others could, thus creating a pool of information-imbalance among the users.

SEBI's say in the Co-Location Case:

  • NSE was charged guilty of fraud and unfair trade practice under the SEBI 'Prohibition of Fraudulent and Unfair Trade Practices' (PFUTP) Regulations.
  • NSE also affected market fairness by not exercising requisite due diligence while fixing the TBT (tick-by-tick data feed) architecture.
  • SEBI, having estimated that NSE had earned a profit of Rs 624.89 crore during 2010-11 to 2013-14 from its co-location operation, and ordered the former and the present top employees in the exchange-management to refrain from holding any position in the stock exchange for 2 to 3 years.

Question:

Q. Who has banned NSE, National Stock Exchange from gaining access to the securities market for a period of 6 months?
a. Stock Exchange Board of India (SEBI)
b. Share Market Board of India (SMBI)
c. Securities and Exchange Board of India (SEBI)
d. Stocks and Securities Board of India (SSBI)
NSE banned by SEBI from securities market for 6 months NSE banned by SEBI from securities market for 6 months Reviewed by Neha on May 05, 2019 Rating: 5

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