Capital markets regulator SEBI on Tuesday imposed total fine of Rs 6 lakh on Advent Stock Broking Co. for not adhering to the code of conduct prescribed for a stock broker and other market norms while using NSE's co-location facility.
The order came after SEBI received multiple complaints pertaining to allegations of malpractices with respect to the co-location facility being provided by the National Stock Exchange of India. In the wake of allegations of preferential access to tick-by-tick data feed given by NSE to certain trading members, the matter was taken up for investigation and Advent was one of the trading members that was identified for comprehensive investigation for primary and secondary server connects, SEBI said.
As per NSE's co-location guidelines, secondary server was provided by NSE in order to enable members to connect to the server in case of disconnection or failure to connect to the primary server.
The probe found that the broker had frequently connected to the secondary server during 2013 and 2014. It connected to the secondary server, which was meant to be used in case of non-availability of data from TBT primary source, "repeatedly without valid reason", SEBI noted in an order.
Being an intermediary, it failed to comply with operational guidelines and instructions issued by NSE and thereby failed to exercise due skill, care and diligence, it further added. "By circumventing the primary source on a regular basis, the Noticee (Advent stock Broking) engaged in conduct which undermined the trading system set up to provide fair and equitable access to all brokers who connected to it," SEBI said.
SEBI noted that the broker violated NSE's bye-laws, code of conduct specified for stock brokers under SEBI's norms and other market norms. Consequently, a total fine of Rs 6 lakh has been imposed on Advent Stock Broking.
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