Market regulator SEBI has settled the long-running NSE co-location case without taking any action. The regulator has closed the case without any direction. SEBI has not found sufficient evidence of collusion or conspiracy in this case.
SEBI took this decision on Friday after a thorough review of a series of appeals and orders of the Securities Appellate Tribunal.
This case was a hindrance in the approval of NSE’s IPO. After this decision, this obstacle also got removed. This case started after SEBI’s order of April 30, 2019, in which NSE’s co-location facility was raised. This is a system that allows trading members to colocate their servers in the exchange’s data center.
This order was subsequently challenged in appeal before the Securities Appellate Tribunal (SAT), leading to the decision of the SAT dated January 23, 2023, which was the basis for the recent proceedings.
In its January 2023 decision, the SAT evaluated several appeals, including those from the NSE and individuals such as Ravi Narayan and Chitra Ramakrishna.
The SAT verdict cited a lack of evidence of systemic malpractice, although human errors in IP allocation and system monitoring were pointed out.
In this case, the SAT found that NSE’s system architecture provided fair and transparent data access, but problems were identified with the allocation of IPs and a failure to adequately monitor server connections. Despite these deficiencies, the SAT did not find any violations of the market regulator’s rules.
SEBI’s recent review also confirmed SAT’s findings, stating that no new evidence has emerged that substantiates the allegations of collusion or conspiracy.
