The Securities Appellate Tribunal (SAT) on Wednesday asked National Stock Exchange (NSE) to transfer Rs 625 crore to Securities and Exchange Board of India (Sebi) within two weeks, in connection with the alleged lapses in the algorithmic trading systems and co-location services of NSE. This money will remain in an account managed by Sebi till SAT decides the case.
The tribunal was hearing NSE s petitions challenging the co-location orders of Sebi, which imposed a regulatory fine on the stock exchange for allegedly giving unfair access to its network servers. In April, Sebi directed exchange to disgorge profits worth over Rs 1,000 crore and imposed a six-month ban on launching new derivative products besides action against other entities, including some current and former officials, after finding that NSE had failed to ensure equal access for all brokers to its network servers.
Sebi had passed five separate orders, together running into 400 pages, related to the co-location case, and said NSE had failed to ensure equal and fair access to all members when they were using its algorithmic trading platform and co-location services.
Algorithmic trading, or algo in market parlance, refers to orders generated at superfast speed by the use of advanced mathematical models that involve automated execution of trade. Even a split-second faster access is considered capable of bringing huge gains to a trader. On Wednesday, SAT while granting interim relief to NSE in the case, directed Sebi to file its reply to NSE s petition challenging the order of the watchdog within six weeks. NSE has informed SAT that it has no intention of pursuing any fund raising or public offer plans for the next six months. The NSE had planned an initial public offering in 2017 but it has been delayed due to the Sebi s investigation into the co-location case.
The appellate tribunal also directed NSE to continue to maintain the revenue generated through co-location services in an escrow account. SAT will now hear the case on July 22.