This story is from June 22, 2018

Co-location case at NSE: Sebi starts taking action

Markets regulator Sebi on Thursday said it has initiated enforcement actions against entities involved in the high-frequency trading (HFT) server co-location (co-lo) case involving the National Stock Exchange (NSE).
Co-location case at NSE: Sebi starts taking action
Mumbai: Markets regulator Sebi on Thursday said it has initiated enforcement actions against entities involved in the high-frequency trading (HFT) server co-location (co-lo) case involving the National Stock Exchange (NSE).
Sebi chairman Ajay Tyagi said, “We have received the investigation report in the co-location case and have completed the examination of the investigation report. We have initiated enforcement actions against some entities.” This means in a few days Sebi will come out with its order in the NSE co-lo case, including naming the people who were involved in the case.
The case relates to some NSE officials, in connivance with some external companies and individuals, helping a select few brokers to access trading data ahead of others trading on its platform.
This favouritism allegedly led to huge profits for the brokers who got the trading data ahead of others. The scam was exposed after a whistleblower wrote to Sebi, and another business magazine that brought it into the public domain.
According to Tyagi, the regulator’s enforcement actions would be complete in a few days. The Sebi chief was speaking to reporters after the regulator’s board meeting.
Recently, the CBI also registered a case in the NSE’s co-lo case and said that Sebi officials were involved in the same. Tyagi, however, declined to comment on the CBI’s investigations in the case.
In another high profile case relating to the conduct of ICICI Bank MD Chanda Kochhar, Sebi is yet to receive any reply from the lender, Tyagi said. In Thursday’s board meeting, Sebi changed rules governing initial public offerings (IPOs). The regulator has reduced the time between announcement of price band for an offer and the opening of the issue to two working days from five. It also said that for all public and rights offers, companies will need to disclose their financials for the previous three years, down from five years earlier. Additionally, only consolidated financials should be given in the prospectus, while stand-alone financials going public along with the company’s major subsidiaries should be put up only on its website.

Sebi also said that a MD of a stock exchange, depository or a clearing corporation can have a maximum of two terms of five years each. For a person to come back to lead a Market Infrastructure Institution (MII) again after completing a 10-year term, there should be an one-year cooling off period.
Sebi chairman also said it has received four reports, from Axis Bank, Tata Motors, Bata India and HDFC Bank, about selective leak of price sensitive information through WhatsApp and it was carrying out further investigations. It’s preliminary investigations had found the figures that were circulated on WhatsApp groups before the official announcement of quarterly results were nearly matching with the ones announced later. About 10-12 companies, along with brokers, analysts, company officials and investment advisers are under Sebi scanner in this case.
Sebi on Thursday also abolished the category of sub-brokers from the market and merged them with the category called ‘authorised person’. Sebi chief said the two entities, about 40,000 sub-brokers and 2 lakh authorised persons, were performing the same activity and the two are being merged to avoid unnecessary duplication.
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