SEBI fines NSE, former MD, 16 others 438 mln rupee in dark fibre case

29 Jun 2022

The Securities and Exchange Board of India, on Tuesday, imposed penalties aggregating to 438 mln rupees on 18 entities including National Stock Exchange of India and its former Managing Director and Chief Executive Officer, Chitra Ramakrishna, in the dark fibre and leased line connectivity case.

The case involved alleged preferential treatment given to Way2Wealth Broker and GKN Securities by NSE and its officials by allowing them to utilise the services of unlicensed technology vendor Sampark Infotainment to lay optical fibres to colocation data centres of NSE and BSE.

Colocation refers to the practice of renting space at data centers for placing one’s own equipment such as servers, usually for quicker network connectivity.

The arrangement was found to have breached the exchange’s norms requiring equal, unrestricted, transparent and fair access to all brokers.

SEBI held NSE accountable for not disseminating to all members changes in empaneled service providers for providing point-to-point connectivity at NSE’s colocation facility. Point-to-point connectivity, in this context, refers to the link between a stock broker's server at NSE colocation and that stock broker’s server at BSE colocation. The exchange was also held responsible for the consequent preferential treatment given to the two brokers.

Former NSE officials Ramakrishna and Subramanian were held accountable for failing to prevent the breaches from happening given the fact that they had total control over the affairs of the exchange.

SEBI imposed a fine of 70 mln rupees on the exchange and 50 mln rupees each on Ramakrishna, former Chief Operating Officer Anand Subramanian, and Ravi Varanasi, who was in charge of the colocation business.

Way2Wealth Brokers was fined 60 mln rupees while GKN Securities received a penalty levy of 50 mln rupees. The technology vendor, Sampark Infotainment, was fined 30 mln rupees.

Further, three partners in GKN Securities — Om Prakash Gupta, Rahul Gupta and Sonali Gupta — have been handed out penalties of 11 mln rupees each.

The violations took place during the period of 2014 to 2016.