SEBI imposes Rs 25 lakh fine on BSE for unequal data access, oversight failures

The Securities and Exchange Board of India (SEBI) has imposed a penalty of Rs 25 lakh on the Bombay Stock Exchange (BSE) for failing to provide equal access to corporate disclosures and for inadequate oversight of trading practices.

In its order, SEBI stated that corporate announcements of listed companies were accessible to employees of BSE’s Listing Centre Module (LCM) and its paid subscribers before being published on the exchange’s official website. This selective access undermined the principles of fairness, transparency, and impartial information dissemination, SEBI noted.

The regulator also criticised BSE for its inaction against brokers who repeatedly modified client codes during trades, calling it a case of “laxity and negligence.” It emphasised that BSE, as a first-level regulator, has a fiduciary responsibility to ensure a fair and trustworthy market ecosystem.

“This case involves multiple acts of omission, laxity, and negligence, marked by a lethargic approach, which cannot be excused. If such regulatory oversight is allowed to continue unchecked, it risks damaging the credibility of both BSE and SEBI,” the order stated.

Despite acknowledging that BSE has since taken corrective measures—such as introducing a time gap in the release of information to paid clients—SEBI asserted that violations of Regulation 39(3) of the SECC Regulations had occurred prior to its intervention.

BSE argued there was no regulatory mandate to provide information via RSS feeds. However, SEBI clarified that the absence of a statutory requirement does not diminish the exchange’s obligation to ensure fair access to all market participants.

“BSE, as a Market Infrastructure Institution (MII), bears a higher responsibility to uphold the principles of transparency. Any system that allows privileged early access—even due to technical reasons—must be rectified to maintain trust in the market,” SEBI said.

Santosh Shukla at SEBI concluded the case by invoking monetary penalties under Section 23H of the SCRA and Section 15HB of the SEBI Act, rather than harsher actions, while stressing the seriousness of the violations.

SEBI said BSE shall remit the said amount of penalty, within a period of forty-five (45) days from the date of receipt of this order, through online payment facility available on its website.

"In the event of failure to pay the said amount of penalty within 45 days of the receipt of this order, recovery proceedings may be initiated under section 28A of the SEBI Act, 1992 for realization of the said amount of penalty along with interest thereon, inter alia, by attachment and sale of movable and immovable properties of BSE," it said.