New Delhi: The National Stock Exchange (NSE) has paid Rs 40.35 crore to the Securities and Exchange Board of India (Sebi) to settle a case involving several regulatory violations related to data management, internal governance, and compliance lapses. The settlement was made without the NSE admitting or denying Sebi’s findings.
In a five-page order issued Thursday, Sebi stated that all potential proceedings arising from these violations stand settled following the terms of the settlement regulations. The case stems from a Sebi inspection conducted between February 2021 and March 2022.
One of the key lapses highlighted was NSE’s outsourcing of storage for media tapes containing historical trade data to a third-party vendor without a binding legal agreement, risking exposure of sensitive and proprietary data. Sebi also found that confidential, price-sensitive information from listed companies was shared with NSE’s subsidiary, NSE Data and Analytics Ltd (NDAL), and further passed on to a third-party vendor without proper contractual safeguards.
Additionally, NSE’s system allowed unpublished corporate announcements to be sent to NDAL clients before public disclosure, raising potential insider trading concerns.
Other issues flagged included:
• Waiving penalties without approval from the required committee.
• Failure to act against brokers frequently modifying client codes.
• Lack of policy for reviewing error trades.
• Inadequate due diligence in monitoring client code changes.
NSE’s revised settlement terms, filed in January 2024, were approved by Sebi’s High Powered Advisory Committee, subject to the payment and fulfillment of non-monetary conditions. The committee also advised an internal review to identify responsible officials. However, NSE’s Internal Disciplinary Committee concluded no individual could be held accountable, attributing the lapses to collective decisions at the board or organisational level—a conclusion later accepted by the exchange’s board and Nomination and Remuneration Committee.
Sebi confirmed receipt of the settlement payment on June 25, 2025. The matter is closed for now but could be reopened if misrepresentations or breaches are discovered. In its July 29 earnings release, NSE disclosed it had filed two more settlement applications with Sebi concerning the co-location and dark fibre cases. A response from Sebi is awaited.