Capital markets regulator SEBI on Monday imposed a fine of Rs 3 lakh on Share India Securities Ltd for flouting norms related to the National Stock Exchange co-location facility.
The order came after SEBI received multiple complaints pertaining to allegations of malpractices with respect to the co-location facility provided by NSE (National Stock Exchange).
In the wake of allegations of preferential access to the tick-by-tick data feed given by NSE to certain trading members, the matter was taken up for investigation by SEBI.
The noticee (Share India Securities) was one of the trading members identified for comprehensive investigation (including forensic audit) for primary and secondary server connects.
The stock broker logged into the secondary server in currency derivatives, cash market and futures and options during 2012-2014, as per SEBI order.
As per NSE's co-location guidelines, the secondary source for TBT (Tick-by-Tick) data is to be used in the event of non-availability of the TBT primary source and trading members should not routinely connect to the secondary server.
Further, as per available records, NSE advised the broker not to connect to the secondary server. However, the broker continued to log in to the secondary server, SEBI noted.
The noticee connected frequently to the secondary server, which violated the NSE co-location guidelines, thereby also failing to exercise due skill care and diligence in conducting its trading operations, it added.
By circumventing the primary source regularly, the noticee engaged in conduct which undermined the trading system set up to provide fair and equitable access to all brokers connected to the exchange server.
Through such acts, Share India Securities flouted the provisions of the NSE by-laws and code of conduct specified under the stock broker rule as well as PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) regulations.
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