NSE Co-Location Scam: SAT Sets Aside SEBI Penalty On NSE And Former Chiefs

The Securities Appellate Tribunal on Wednesday set aside a SEBI order levying a Rs 1 crore penalty on the National Stock Exchange, as part of its investigation into the co-location case. The court also set aside Rs 25 lakh penalties imposed on the exchange's former chiefs, Ravi Narain and Chitra Ramakrishna.

This is the second SEBI order pertaining to the co-location matter that SAT has set aside. In January 2023, the appellate tribunal had set aside the markets regulator's order directing NSE to disgorge the Rs 624 crore made in unlawful gains and also ordered it to pay a Rs 100 crore penalty for due-dilligence lapses.

During the hearing, the exchange submitted that the earlier order had already served the purpose of a penalty, which is to act as a deterrent. As the regulatory objective is already subsumed in the earlier order, the penalty needs to be set aside.

Narain's counsel also made similar submissions. According to him, the present order was made under the Stock Exchanges and Clearing Corporations Regulations, which were not operational at the time of the violation. The tribunal also had earlier held that it was not applicable to the present case.

However, the penalty was levied for different violations and need not be taken into consideration in the present case, according to the Securities and Exchange Board of India.

Another appeal of similar nature is pending before SAT in the co-location matter. The markets regulator had levied a Rs 90 crore penalty on the exchange for differential treatment given to certain brokers by the NSE, in the form of dark fibre cables.