InvestorQ : Why has SEBI imposed a penalty of Rs.6 crore on NSE?
Juvina Maggie made post

Why has SEBI imposed a penalty of Rs.6 crore on NSE?

Answer
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Deepa Salunkhe answered.
4 weeks ago


SEBI has levied a steep penalty of Rs.6 crore on the NSE for investing in 6 companies that are unrelated or non-incidental to the stock exchange business. These 6 companies include Power Exchange India, CAMS, NSEIT, NSDL E-Governance Infrastructure, Market Simplified India and Receivables Exchange of India.

SEBI has imposed Rs.1 crore for each of these investments totalling to Rs.6 crore. NSE held between 25 and 100% stakes in these entities through its subsidiary NSE Investments. In fact, the CAMS was intended to give an exit to NSE’s 37.5% stake in CAMS.

SEBI’s contention was that all these positions were taken by the NSE in violation of the provisions of Regulation 38(2) Stock Exchange and Clearing Corporation Act 2018. NSE had also failed to obtain prior approval of SEBI, which is mandatory for such deals.

SEBI has rejected NSE’s argument that these investments were related to the core stock exchange business. For example, SEBI observed that the mutual fund registry business of CAMS had not link to the exchange business at all. SEBI also did buy the argument of NSE that these deals were done by subsidiary company.