NSE Under SEBI Probe For Document Leaks

The Securities and Exchange Board of India (SEBI) has initiated investigations into an alleged leak of internal documents from the National Stock Exchange (NSE) to brokers which happened between 2011 and 2015 when Chitra Ramkrishna was CEO of the NSE.

The documents pertain to NSE policy decisions in technology related matters including its co-location policy, besides minutes of board meetings as well as NSE’s internal studies.

These violations fall under two different regulations, namely Stock Exchange & Clearing Corporation (SECC) rules, as well as code of ethics for market infrastructure institutions. Even if these violations were done by a single board member, the company has a responsibility to take suo motu action against the employee, according to legal experts.

Incidentally, the SEBI is also looking into the appointment of Anand Subramanian as NSE’s chief strategic advisor and his subsequently being made its group operating officer.

The development has come after the SEBI issued a show cause notice in the matter on December 16 and summoned NSE officials to submit all the relevant records for inspection.

Incidentally, the NSE is already contesting a SEBI order penalizing it for allegedly giving a few traders preferential access to its servers at the Securities Appellant Tribunal (SAT).

Meanwhile, the NSE has already filed a consent petition in the matter. Consent is a settlement mechanism through which alleged violations can be settled by paying fees to SEBI. In such a settlement, the accused neither agrees nor declines allegations leveled by SEBI.

In this connection, it may be recalled that previously, the SEBI has rejected NSE’s consent application of NSE in the colocation matter. In April 2019, the SEBI passed orders penalizing NSE and some top and former officials.