InvestorQ : As a trader I am worried about the huge penalties on the NSE and on its senior managers. What does all this mean to my trading on the NSE? Will it get impacted in any way?
Archita Jajjoo made post

As a trader I am worried about the huge penalties on the NSE and on its senior managers. What does all this mean to my trading on the NSE? Will it get impacted in any way?

Answer
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Rashi Mehra answered.
1 year ago


The answer is a clear “No”. As the NSE CEO has himself clarified, this order does not impact the functioning of the NSE in any way. Whether NSE pays up immediately or adopts the legal route remains to be seen. But, either ways, the decision will not impact the functioning of the NSE in any way. When you put your trades on the exchange on Wednesday and after that, they will go through like any normal day of trading.

What does the order mean for the NSE and its senior managers?

Let us look at the exchange first. The SEBI order only bars NSE from accessing the capital markets for the next 6 months. That means; the IPO process that NSE was planning will start only after 6 months. Regarding, the sum payable, it does look huge but then the NSE had already set aside Rs.2000 crore towards this co-location issue and hence it is provided for. Also, NSE’s entire co-location revenues have been going into an escrow account and this should bring an end to the uncertainty. It will mean that the exchange will not have to transfer its co-location revenues to the escrow once this fine is paid. Regarding the senior managers (past and present), the penalty is pecuniary and also in terms of a ban on any association with the capital markets for a specified period of time.

What does the order mean for the three brokers?

The implications could be a lot more serious for the 3 brokers; OPG Securities, GKN Securities and Way2Wealth Securities. These brokers will not be able to operate in the capital markets for the next five years in any form, apart from the monetary disgorgement of profits. Effectively, customers having trading accounts and demat accounts with any of these 3 brokers will be required to move their trading accounts and demat accounts to other brokers. The overall impact on the stock markets or on the trading activity is likely to b e very limited.