Dark Fibre Case: SAT partly sets aside SEBI order against NSE

The Securities Appellate Tribunal on Wednesday partly set aside a 2019 SEBI order directing the National Stock Exchange to disgorge Rs 62.6 crore made in unlawful gains, along with interest earned, from its co-location facility since September 2015.

The tribunal further directed the Securities and Exchange Board of India to refund any amount deposited in the matter. All other directions passed against the exchange, including a periodic review of its co-location facility, were found appropriate and were upheld. The tribunal also quashed SEBI’s direction barring Chitra Ramakrishna, NSE’s ex-chief, from holding any managerial positions in a market intermediary for three years.

In 2019, SEBI had passed disgorgement orders against the exchange and 15 other entities for irregularities in the laying of dark fibre for its co-location facility, used for high frequency trading. According to the markets regulator, the exchange allowed Sampark Infotainment Pvt., a vendor not authorised by the Department of Telecommunications, to lay dark fibre cables for stock brokers. The exchange not only failed to verify the eligibility of the vendor, but also waived physical verification of broker premises, the regulator had said.

The tribunal previously set aside two orders of SEBI, which had penalised NSE and its ex-chiefs for their involvement in co-location scam. Bloomberg