𝐒𝐄𝐁𝐈’𝐬 ₹25 𝐥𝐚𝐤𝐡 𝐏𝐞𝐧𝐚𝐥𝐭𝐲 𝐀𝐠𝐚𝐢𝐧𝐬𝐭 𝐁𝐒𝐄: 𝐀 𝐒𝐭𝐚𝐫𝐤 𝐑𝐞𝐦𝐢𝐧𝐝𝐞𝐫 𝐨𝐟 𝐌𝐚𝐫𝐤𝐞𝐭 𝐈𝐧𝐭𝐞𝐠𝐫𝐢𝐭𝐲 𝐎𝐛𝐥𝐢𝐠𝐚𝐭𝐢𝐨𝐧𝐬

SEBI has imposed a ₹25 lakh penalty on BSEIndia for significant regulatory lapses identified during an inspection conducted between Feb 2021 and Sept 2022. The order passed by Mr. Santosh Shukla, QJA, SEBI highlights crucial concerns surrounding data dissemination, client code modification practices, and the responsibilities of MIIs in upholding market integrity.

𝐊𝐞𝐲 𝐑𝐞𝐠𝐮𝐥𝐚𝐭𝐨𝐫𝐲 𝐁𝐫𝐞𝐚𝐜𝐡𝐞𝐬 𝐈𝐝𝐞𝐧𝐭𝐢𝐟𝐢𝐞𝐝:

1. 𝐏𝐫𝐞𝐦𝐚𝐭𝐮𝐫𝐞 𝐀𝐜𝐜𝐞𝐬𝐬 𝐭𝐨 𝐂𝐨𝐫𝐩𝐨𝐫𝐚𝐭𝐞 𝐀𝐧𝐧𝐨𝐮𝐧𝐜𝐞𝐦𝐞𝐧𝐭𝐬: SEBI found that BSEIndia’s system permitted paid data clients and internal teams, notably the Listing Compliance Monitoring (LCM) team, to access corporate disclosures milliseconds before public release on its website. While brief, this latency violated Regulation 39(3) of the SECC Regulations, which mandates equal, unrestricted, and fair access to market information.

2. 𝐋𝐚𝐩𝐬𝐞𝐬 𝐢𝐧 𝐂𝐥𝐢𝐞𝐧𝐭 𝐂𝐨𝐝𝐞 𝐌𝐨𝐝𝐢𝐟𝐢𝐜𝐚𝐭𝐢𝐨𝐧 (𝐂𝐂𝐌) 𝐌𝐨𝐧𝐢𝐭𝐨𝐫𝐢𝐧𝐠: SEBI flagged serious shortcomings in BSE’s oversight of CCMs, including:
(a) Repeated allowance of CCMs by brokers without adequate scrutiny.
(b) Lax review of error accounts, with trades lingering beyond permissible timelines.
(c) Approval of institutional CCMs without validating genuine trading errors.

3. 𝐈𝐧𝐬𝐢𝐝𝐞𝐫 𝐓𝐫𝐚𝐝𝐢𝐧𝐠 𝐂𝐡𝐚𝐫𝐠𝐞 𝐍𝐨𝐭 𝐏𝐫𝐨𝐯𝐞𝐧: While SEBI examined possible UPSI communication under the PIT Regulations, it found no foundational facts to prove that BSE, as an institution, communicated such information. Thus, no violation of Regulation 3 of the PIT Regulations was established.

𝐑𝐞𝐠𝐬𝐭𝐫𝐞𝐞𝐭 𝐈𝐧𝐬𝐢𝐠𝐡𝐭𝐬: Systemic Neutrality is Non-Negotiable

SEBI’s order signals a stricter stance on even “technical” lapses by frontline regulators like MIIs. Compliance must go beyond form to proactively address process risks. BSEIndia’s defense of speculation was firmly rejected and SEBI emphasized that flawed systems, however brief or unintended, threaten market fairness and warrant action.
(For context on earlier NSE India issues, see https://lnkd.in/d8SBvrJK)

The SEBI order can be accessed at https://lnkd.in/dAKSdp6c