Did NSE Settle Data Disclosure Case with SEBI for Rs 40 Crore?
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Synopsis
The NSE has agreed to a significant settlement with SEBI, raising questions about its governance practices. This case highlights the importance of data handling in financial institutions, as sensitive information was shared improperly, impacting market integrity.
Key Takeaways
- NSE to pay Rs 40.35 crore in settlement.
- Regulatory proceedings concluded without admission of guilt.
- Concerns raised about governance and data handling.
- SEBI's inspection revealed serious lapses in compliance.
- Additional measures include a system audit and compliance report.
Mumbai, Aug 1 (NationPress) The National Stock Exchange of India (NSE) has consented to pay Rs 40.35 crore to resolve allegations concerning the indirect sharing of confidential information regarding listed companies with a third-party vendor, as announced by the Securities and Exchange Board of India (SEBI) on Friday.
This settlement, which does not include an admission of wrongdoing, concludes regulatory actions in a case that raised significant concerns about governance at one of India’s key market institutions.
The issue traces back to SEBI’s inspection that spanned from February 2021 to March 2022.
The regulator discovered that NSE, lacking a binding agreement, had outsourced the storage of historical trade data to a third-party vendor, permitting sensitive information to be transferred to its data subsidiary, NSE Data and Analytics Limited (NDAL).
NDAL subsequently disseminated this information to external clients, thereby allowing them to access unpublished price-sensitive corporate announcements prior to their public release.
In its ruling dated July 31, the market regulator indicated that NSE’s system design “facilitated the transmission of unpublished price-sensitive corporate announcements to NDAL's clients before hosting them on its website,” breaching several market regulations, including insider trading rules.
SEBI also highlighted other governance flaws, such as a committee overruling penalties without appropriate authorization and insufficient due diligence in permitting client code modifications between unrelated institutional clients.
NSE submitted a suo motu settlement application under SEBI’s Settlement Proceedings Regulations, agreeing to the payment along with additional non-monetary measures, including a system audit and compliance report.
An internal review conducted by the exchange determined that the violations stemmed from decisions made at the organizational or board level, with no individual officer held accountable.
Point of View
It is crucial for organizations like the NSE to uphold the highest standards of governance and transparency. This settlement with SEBI highlights the ongoing challenges in maintaining trust within India's financial markets. Continuous oversight and reform are essential to protect investors and ensure regulatory compliance.
NationPress
07/10/2025
Frequently Asked Questions
What was the settlement amount NSE agreed to pay?
NSE agreed to pay Rs 40.35 crore to settle charges related to data disclosure.
What were the charges against NSE?
The charges involved the indirect sharing of confidential information on listed companies with a third-party vendor.
Did NSE admit guilt in the settlement?
No, the settlement does not involve any admission of guilt.
What were the findings of SEBI during the inspection?
SEBI found that NSE had outsourced the storage of historical trade data without a binding contract, allowing sensitive information to be shared improperly.
What measures will NSE implement following the settlement?
NSE will conduct a system audit and provide a compliance report as part of the settlement agreement.
