In a five-page order issued on Thursday (August 1), the Securities and Exchange Board of India (Sebi) said that in terms of the settlement regulations, “it is hereby ordered that any proceedings that may be initiated for the violations… are settled in respect of the applicant”. The case pertains to an inspection carried out by Sebi between February 2021 and March 2022.
As per the order, one of the key violations, involving NSE, was the outsourcing of storage of media tapes containing historical trade data to a third-party vendor without a legally binding agreement. This lapse exposed sensitive proprietary and member-related information to potential unauthorised access.Also Read: NSE Q1 Results: Net profit up 10% from March to ₹2,924 crore; margins expand
Sebi also found that NSE was outsourcing and sharing confidential, price-sensitive information of listed companies with its subsidiary NSE Data and Analytics Ltd (NDAL), for onward distribution to a third-party vendor, without having any legally binding agreement in place.
The applicant’s (NSE) system architecture enabled it to send unpublished price-sensitive corporate announcements to the clients of NDAL, prior to hosting the same on its website, raising concerns under Sebi’s insider trading regulations.
Other violations included the waiver of penalties by an internal NSE committee without required approval from the Member and Core Settlement Guarantee Fund Committee, and failure to define and act against brokers frequently modifying client codes.
Also Read: Jane Street crackdown by SEBI impacts India’s options market volumesThe regulator also observed that NSE failed to formulate a policy for carrying out ‘review of error trades’ and ‘frequency of such reviews’, resulting in failure to review the error accounts comprehensively as mandated by Sebi. The exchange did not ensure proper due diligence in verifying client code modifications.
NSE filed revised settlement terms in January 2024, which were approved by Sebi’s High Powered Advisory Committee (HPAC), subject to payment of Rs 40.35 crore and compliance with non-monetary conditions.
The committee also advised NSE to conduct an internal review to identify officers responsible for the lapses and factor the findings into their performance appraisal.
Later, NSE informed the regulator that its Internal Disciplinary Committee had conducted a review but could not identify any specific officer responsible for the violations, attributing the lapses to decisions taken at the organisational or board level. This conclusion was accepted by the exchange’s Nomination and Remuneration Committee and NSE’s Board.
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NSE paid the amount on June 25, 2025, and the same was confirmed by Sebi, bringing the matter to a close. However, the regulator retains the right to reopen the case if any misrepresentation is found or settlement conditions are breached.
In its earnings release on July 29, NSE said it has filed two settlement applications with the Sebi in matters related to the co-location probe and the dark fibre case.
“On June 20, 2025, NSE filed two separate settlement applications with Sebi under Sebi’s (Settlement Regulations) 2018 for the settlement of Co-location WTM order and Colocation AO order, and Dark Fibre WTM order and dark fibre AO Order. Revert from Sebi on the mentioned applications is awaited,” NSE said in the release.
In October 2024, NSE’s former chief, Vikram Limaye and eight other individuals settled with markets regulator Sebi a case pertaining to alleged failure to address the bourse’s TAP (trading access point) system deficiencies, after paying ₹643 crore.
