NSE, the country’s largest stock exchange, and its subsidiary NSE Clearing (NCL) paid ₹72 crore to market regulator SEBI for settling the technical glitch that halted trading on the exchange abruptly.
Individually, the NSE paid a total of ₹50 crore and NCL doled out ₹22 crore to settle the case, according to a consent order approved by the SEBI.
The consent order is a scheme through which an entity or individual accused of a market violation can settle the matter with SEBI by paying a fee without accepting or denying the guilt.
Trading halted
On February 24, 2021, trading was halted at the NSE for nearly four hours reportedly due to telecom link failure leading to the unavailability of the online risk management system of NCL, which is a wholly-owned subsidiary of NSE.
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It is responsible for clearing and settlement of all trades executed on the exchange platform.
Due to the trading halt, many derivative traders faced challenges in squaring off their positions. The exchange eventually extended the trading hours beyond the routine 3.30 p.m. to allow the traders to conclude their transactions.
The telecom link was then affected due to construction activity near the NSE headquarters at BKC in Mumbai. Following this, the exchange servers were disconnected completely.
“The acceptance of the settlement terms by the Panel of Whole Time Members and receipt of settlement amount and undertakings, the instant proceedings initiated against the Applicants vide Show-Cause Notice issued on August 11, 2021, are disposed of,” said SEBI in its order.
Community Service
Meanwhile, Vikram Limaye (former MD, NSE), Vikram Kothari (MD, NCC) and Shiv Kumar Bhasin (CTO, NSE) have been directed to do ‘pro bono’ community service of at least 14 days over the next year. The service will be for furthering the cause of investor education and awareness, by actively contributing to specified programmes that are conducted and monitored by SEBI’s Office of Investor Assistance and Education.
They have been told to take up and pass specific and appropriate training courses (specified by SEBI), at their own cost, within the next six months, said SEBI.