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SEBI issues settlement order for alleged failure of systems of NSE India and NCL

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SEBI issues settlement order for alleged failure of systems of NSE India and NCL for approx. 73 crores and other non-monetary terms – single handedly surpassing the total settlement amount of 59 crores collected by SEBI in the year 2021-22

SEBI yesterday issued a settlement order with NSE India, NSE Clearing Ltd. (NCL) and other key managerial personnel.

The matter pertains to a show cause notice issued for failure of systems of NSE India and NCL when NSE India decided to halt trading for a certain duration during the trading hours on February 24, 2021. NSE India informed that it has multiple telecom links with two service providers and that it received communication from both of them that there are issues with their links due to which there is an adverse impact on its system.

The WTM proceedings were initiated against  NSE India Ltd, NCL , MD & CEO of NSE India, MD of NSL and Chief Technology & Operations Officer of NSE India for alleged violation of Securities Contracts (Regulation)  (Stock Exchanges and Clearing Corporations) Regulations, 2018 (“SECC Regulations, 2018”), SEBI Act, 1992 and Securities Contracts (Regulation) Act, 1956 (“SCRA, 1956”).

The SCN alleged failure on the part of the Noticees to monitor services of vendor in respect of core and critical activities of NSE India and NCL, ensuring systems  preparedness and readiness to move operations to Disaster Recover Site (DRS), ensuring orderly execution of trades among other things.

Noticees filed for settlement for the alleged violations in the SCN. The High Powered Advisory Committee (HPAC) recommended settle the matter on composite payment by NSE and NCL (for themselves and their employees) of an amount of Rs. 49,76,80,000/- and Rs. 22,88,00,000/-, respectively. Further, non-monetary terms for the individual noticees included taking up specific courses and committing to pro bono community service for investor education and awareness. The terms of settlement were acceded to by all Noticees, without admitting or denying the findings of facts and conclusions of law.

It is interesting to note that as per the SEBI Annual Report 2021- 22, the total settlement amount in the year 2020-21 was approx. 68 crores ( 216 applications disposed of by passing orders ) and in the year 2021-22 it was approx. 59 crores (107 applications disposed of by passing orders). Hence by this single order, the settlement amount under SEBI Settlement Regulations surpasses the total in the last two years.

The complete order is enclosed for reader’s views.

Readers can also share their views with Regstreet Law Advisors on info@regstreetlaw.com

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