Sebi action in NSE colo case in ‘few days’

Probe against brokers who allegedly got preferential access at the exchange’s co-location servers

Doing whatever is necessary to safeguard investor interests: Tyagi

The Securities and Exchange Board of India (Sebi) will soon initiate enforcement action against the country's largest stock exchange, the National Stock Exchange (NSE) and various other entities involved in the co-location controversy, infamously referred to as ‘colo controversy’.

The market regulator has been probing the case since early 2015 following multiple complaints that some brokers got preferential access at the exchange’s co-location servers.

“We have received investigation reports from forensic auditors and also from the internal team. We have taken into consideration their recommendations and will be initiating enforcement action on institution and individuals in the coming few days,” said Sebi chairman Ajay Tyagi, while briefing the press on Thursday.

Tyagi clarified that NSE’s proposed initial public offering (IPO) is not related to the on-going investigation.

NSE has said its IPO will be on hold till the co-location issue is resolved.

Sources say Sebi's enforcement action would be launched against all 14 officials who were named in the show cause notice for allegedly violating securities contract rules and stock exchange clearing corporation norms. The notice had mentioned failure on the part of NSE officials in ensuring fair access and their noncooperation during the probe.

Asked about the recent CBI action in the matter, Tyagi said, “Each authority has its own jurisdiction. We have probed the matter under our jurisdiction and as per the securities laws provisions.

So, accordingly, it is up to them (the CBI), if they have information against Sebi officials on criminal misconduct, they can take action as per the law.”

The CBI had recently filed a first information report in the matter,

naming some Sebi and NSE officials. CBI charged Sebi officials for colluding with a stock broker who along with NSE officials indulged in ‘fraud, criminal conspiracy and destruction of digital evidence’.

Earlier this year, the regulator had returned the consent applications by those served the show cause notices, including NSE, citing pending investigation.