SEBI shall not initiate any enforcement action against the Applicant for the said violations
FinTech BizNews Service
Mumbai, 1 August, 2025: Upon consideration of the submissions of the Applicant NSE by the Panel of Whole Time Members and acceptance of the same in terms of Regulation 15 of the Settlement Regulations on June 16, 2025, a Notice of Demand for Rs40,35,00,000 (Rupees Forty Crore Thirty Five Lakhs only)was issued to the Applicant on June 18, 2025.The Applicant vide email dated June 25, 2025 informed about the remittance of the aforesaid settlement amount and SEBI has confirmed credit of the same. On the basis of the stated facts, in exercise of the powers conferred under Section 15JB read with Section 19 of the SEBI Act and in terms of Regulation 23 of the Settlement Regulations, the SEBI has ordered that any proceedings that may be initiated for the violations, are settled in respect of the Applicant.
Following is the complete text of the SEBI’s order:
NSEIL (hereinafter referred to as the “Applicant”) filed a suo-motu settlement application under the Securities and Exchange Board of India(Settlement Proceedings) Regulations, 2018 (hereinafter referred to as “Settlement Regulations”) proposing to settle by neither admitting nor denying the findings of facts and conclusions of law, the enforcement proceedings that may be initiated against it for the alleged violation of the following:
Particulars of the violation
The Applicant outsourced the activity of storage of Media tapes containing historical trade data to a third party vendor without any legally binding written contract resulting in the failure of the Applicant to carry out its obligation of safekeeping trade related data and preventing unauthorized usage of proprietary, member related and potentially market sensitive information.
The internal committee was vested with the authority to waive off the penalty amount levied as per Member and Core Settlement Guarantee Fund Committee (MCSGFC)policy without the approval of MCSGFC.
The Applicant was outsourcing and sharing confidential, price sensitive information of listed companies with NSE Data and Analytics Limited (NDAL), for onward distribution to a 3rd party vendor, without having any legally binding agreement in place. Further, the Applicant’s system architecture enabled it to send unpublished price sensitive corporate announcement to the clients of NDAL prior to hosting the same on its website.
Client code modifications was being permitted for trades between two unrelated institutional clients without any due diligence viz. without verifying genuineness and without penalization.
There was no policy in place with respect to defining brokers as frequent modifiers and thereby, no action was triggered in respect of any such brokers, as otherwise mandated by SEBI.
The Applicant failed to formulate the 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 Applicant failed to ensure proper mechanism for performing due diligence to verify the genuineness of client code modifications.
Pursuant to the receipt of the settlement application of the Applicant, the Internal Committee (hereinafter referred to as the “IC”) of SEBI held a meeting with the authorized representatives of NSE on January 17, 2024 wherein the details of the case were deliberated along with the terms of the settlement. During the meeting, the IC also specified certain non-monetary terms to the Applicant to submit a system audit report and a compliance report of the corrective measures undertaken by them.
The Applicant vide email dated January 29, 2024, filed revised settlement terms proposing to pay Rs40,35,00,000 (Rupees Forty Crore Thirty Five Lakhs only) as the settlement amount and also submitted a compliance report of the corrective measures taken to rectify the issues and also filed an undertaking to submit the system audit report.
The High Powered Advisory Committee (hereinafter referred to as “HPAC”) in its meeting held on February 05, 2024considered the settlement terms proposed by the Applicant and recommended that the case may be settled upon payment of Rs40,35,00,000 (Rupees Forty Crore Thirty Five Lakhs only)and subject to the Applicant complying with the non-monetary terms specified by the IC. The HPAC also recommended that the Applicant may be advised to conduct an internal review and identify the officers-in-default and take appropriate measures in their performance appraisal.
The Applicant vide letter dated February 17, 2024submitted the system audit report. The compliance report of the corrective measures submitted vide email dated January 29, 2024 and the system audit report submitted vide email dated February 17, 2024 were found to be in order by SEBI.6.The recommendations of the HPAC were approved by the Panel of Whole Time Members subject to the Applicant conducting and completing internal review and taking appropriate measures within 6 months.
The recommendation of the HPAC as approved by the Panel of Whole Time Members was informed to the Applicant in a meeting held on May 22, 2024.On the requests of the Applicant, the period of 6 months was extended by SEBI by another 6 months. Thereafter, the Applicant vide letter dated April 29, 2025inter alia informed SEBI that its Internal Disciplinary Committee had carried out an internal review to identify officers-in-default wherein it was found that the concerned decisions were taken at organizational/Board level and no specific individual was found accountable/responsible. The aforesaid finding of the Internal Disciplinary Committee were also approved by the Nomination and Remuneration Committee and the Board of NSE.
Upon consideration of the aforesaid submissions of the Applicant by the Panel of Whole Time Members and acceptance of the same in terms of Regulation 15of the Settlement Regulations on June 16, 2025, a Notice of Demand for Rs40,35,00,000 (Rupees Forty Crore Thirty Five Lakhs only) was issued to the Applicant on June 18, 2025.
The Applicant vide email dated June 25, 2025 informed about the remittance of the aforesaid settlement amount and SEBI has confirmed credit of the same.
On the basis of the facts stated above, in exercise of the powers conferred under Section 15JB read with Section 19 of the SEBI Act and in terms of Regulation 23 of the Settlement Regulations, it is hereby ordered that any proceedings that may be initiated for the violations as mentioned at paragraph above, are settled in respect of the Applicant on the following terms:
i SEBI shall not initiate any enforcement action against the Applicant for the said violations, and
ii. Passing of this Order is without prejudice to the right of SEBI under Regulation 28 and Regulation 31 of the Settlement Regulations to initiate appropriate action against the Applicant, if SEBI finds that: (a)any representation made by the Applicant in the present settlement proceedings is subsequently found to be untrue; (b)the Applicant has breached any of the clauses/conditions of undertakings/ waivers filed during the present settlement proceedings; and(c)the Applicant has failed to pay the difference due to any discrepancy while arriving at the settlement terms.
This Settlement Order is passed on this 31stday of July, 2025 and shall come into force with immediate effect.
In terms of Regulation 25 of the Settlement Regulations, a copy of this Order shall be sent to the Applicant and shall also be hosted on the website of SEBI.
