NSE Files Consent Application With SEBI To Settle Co-location Issue

by Vinaya HS on September 8, 2017

in Finance

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The National Stock Exchange or NSE has filed a consent application with the Securities and Exchange Board of India (Sebi) for the matter of settling the colo issue. Through the consent mechanism, the application has been filed under the settlement regulations of the market regulator. Sebi after reviewing the consent application will get back to NSE and announce the following action. NSE is going to work with the market regulator so that the matter can be resolved at the earliest.

The consent application was filed by the NSE before the deadline could lapse in the two days. As per the norms of the market regulator, it is expected that the consent application should to be made within the time span of two months of having received the show cause notice (SCN) by the Sebi.

In the month of May this year, the market regulator Sebi had given away show cause notices to the NSE and 14 of its management personnel at key positions (current and former) for having the irregularities at its colocation facility. As the legal news points out, the trading systems which is used by the National Stock Exchange at its colocation facility was likely to be under the manipulation which was giving a preferential access to some of the select brokers and high frequency traders. To this show cause notice, NSE has already sent its reply.

The consent application has come after the Vikram Limaye has taken the charge as the managing director (MD) & chief executive officer (CEO) at the NSE. The market news says that the NSE has not mentioned any settlement amount in the consent application but NSE has mentioned in the application that it has boosted its system and processes to prevent any chances of occurring the same thing again.

Consent process is quite like an out of court settlement process. It is a negotiation between the capital markets regulator and an entity by paying a penalty or by undergoing a voluntary ban from the stock markets. Under the consent process, an alternative dispute redressal mechanism permits the defaulter to make a settlement for a pending issue with Sebi by accepting a penal action without admitting or denying the guilt. After the consent is filed by the alleged wrong doer, the terms of settlement offered by the applicant are kept before the Sebi. The high powered advisory committee (HPAC) of Sebi, which is led by the retired high court judge and three other experts, looks after the matter. After having analyzed all the facts and circumstances of the case, the HPAC gives its recommendations if the application should be accepted. After this, a panel is formed with two whole time members of Sebi who consider the recommendations and take a final decision.

As per Vikram Limaye, the MD and CEO of the NSE, says that the market regulator will review their application and then decide upon taking it for consent. He wishes to close this asap.

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