NSE settles data disclosure case with SEBI for Rs 40 crore

The National Stock Exchange of India (NSE) has agreed to pay Rs 40.35 crore to settle charges related to the indirect sharing of confidential information on listed companies with a third-party vendor, the Securities and Exchange Board of India (SEBI) said on Friday.

The settlement, which does not involve any admission of guilt, ends regulatory proceedings in a case that raised serious questions about governance at one of India's most important market institutions.

The matter dates back to SEBI's inspection covering the period from February 2021 to March 2022.

The regulator found that NSE, without a binding contract, had outsourced the storage of historical trade data to a third-party vendor and allowed sensitive information to be transferred to its data subsidiary, NSE Data and Analytics Limited (NDAL).

NDAL then shared this information with external clients, enabling them to access unpublished price-sensitive corporate announcements before they were made public.

In its order dated July 31, the market regulator said NSE's system design “enabled it to send unpublished price sensitive corporate announcement(s) to the clients of NDAL prior to hosting the same on its website,” violating several market regulations, including the rules against insider trading.

SEBI also flagged other governance lapses, such as a committee waiving penalties without proper approval and the lack of due diligence in allowing client code changes between unrelated institutional clients.

NSE submitted a suo motu settlement application under SEBI's Settlement Proceedings Regulations, agreeing to the payment and to additional non-monetary measures, including a system audit and compliance report.

An internal review by the exchange concluded that the violations were the result of decisions taken at the organisational or board level, and no individual officer was found responsible.