SEBI drops charges against NSE, Chitra Ramakrishna, Ravi Narayan and other officials in co-location case

The Securities and Exchange Board of India (SEBI) has dropped charges of fraud and unfair trade practices in the co-location case against the National Stock Exchange (NSE) and seven of its former employees, including Chitra Ramakrishna and Ravi Narayan. Evidence

“In the absence of sufficient material/evidence/objective facts on record in this case, the test of ‘preponderance of probability’ fails to provide sufficient support to establish collusion/friendship between OPG (Securities) and its directors (NSE). and its former employees),” Sebi said in its order on Friday. The regulator’s latest order has brought the curtain down on the high-profile co-location case that rocked India’s premier stock exchange.

The case also prompted an investigation by the Central Bureau of Investigation (CBI) and led to the arrest of several top former NSE officials.

Last year, the Securities Appellate Tribunal (SAT) had set aside Sebi’s 2019 NSE order and directed the regulator to re-decide on the issue related to alleged collusion and collusion of broker OPG and its directors with NSE officials.

The regulator accused the NSE of giving preferential access to some brokers on its secondary servers. The case dates back to 2015, when a whistleblower wrote to the regulator alleging that NSE’s co-location system was being manipulated.

‘No Defined Co-Law Policy’

Sebi on Friday said there is no dispute that the NSE does not have a detailed, defined co-location policy. It also failed to monitor the use of secondary servers by trading members without sufficient reason.

“The defense put forward by the NSE about issuing a welcome email in the form of ‘Registration Enablement Mail’ while providing callo facility to TMs (trading members) cannot be said to justify its role as a first-level regulator. Issuing guidelines without monitoring it shows lack of due diligence,” Sebi said. “However, this fact on its own does not help decide the issue of collusion/friendship with OPG and notices of its directors (NSE and its ex-employees).”

The fact that OPG was logging on to the secondary server till May 2015 even after the warning in the first half of June 2012 shows an implicit acquiescence by NSE to OPG. However, the fact that 93 trading members were logged on to the secondary server during this period reduces the possibility of collusion, the regulator said.

He further added that there is no new evidence from earlier proceedings in the present proceedings.

In the same matter, through a separate 238-page order, SEBI allowed OPG Securities to sell Rs. 85 crore was directed to be disgorged and a six-month ban was also imposed on him. This will be in addition to the five-year ban that the regulator imposed on him through an April 2019 order. Sebi said the broking firm gained undue advantage by getting access to NSE’s secondary servers.