NSE colocation case: Sebi acquits Ravi Narain, 8 others

In the high profile NSE co-location case, regulator Sebi on Thursday exonerated nine current and former officials of the exchange, including ex-MD and CEO Ravi Narain, saying they cannot be held responsible for any misconduct or non-compliance in the so-called 'dark-fibre issue'.

The former officials who have been absolved from the charges are the exchange's senior VP (operations) R Nandakumar, Colo head Jagdish Joshi, chief technology officers (CTOs) N Muralidharan and Ravi Apte.

The current officials of the exchange, who have been exonerated are its chief operating officer (Trading) Mayur Sindhwad, CTO-Projects Sankarson Banerjee, CTO-Operations G Shenoy and VP-Regulations Suprabhat Lala.

The order came after an investigation by the Securities and Exchange Board of India (Sebi) against several former and current NSE employees and stockbrokers in the co-location matter.

It was alleged that certain stockbrokers were permitted to avail of Point-to-Point (P2P) dark fibre connectivity from Sampark Infotainment Pvt Ltd, a non-empanelled service provider, and the connectivity provided by this company conferred a latency advantage to a few brokers which resulted in substantial increase in their turnover during the period from April-August, 2015.

While granting permission to stockbrokers for establishing P2P connectivity from its Colo facility with the help of Sampark, NSE has been alleged to adopt a discriminatory approach towards large number of other stockbrokers, by allowing Sampark's services to be availed by only a few selected stock brokers.

It has been alleged that NSE has not acted in a fair and equitable manner while dealing with its members and these nine officials were allegedly employed at top positions of the exchange during the period.

Sebi, in its order, said that none of the nine officials was occupying a post of director and/or key managerial position at the exchange during the relevant period -- April- July 2015.

"Further, the materials available on record also don’t indicate even remotely, the role of any of the noticees as an employee of NSEIL (National Stock Exchange of India Ltd) in facilitating Sampark to establish the P2P connectivity at NSEIL," it added.

With regard to the allegations pertaining to the amendment made in the circular of 2009 in an opaque manner and allowing Sampark to continue to provide the services, in spite of fact that it did not possess the requisite department of telecom license to provide the desired telecom services, Sebi said it did not find any evidence worthwhile to proceed against these officials.

"It can't be held that the noticees herein were involved in facilitating “Sampark” to lay down the Dark fibre line to provide P2P connectivity. There is also no evidence to suggest that noticees had any role in modifying the circular of 2009 in the year 2013. Consequently, they were also not responsible for the non-transparent dissemination of the modification so made in the above mentioned circular of 2009 and therefore, the noticees cannot be held responsible for any misconduct or non-compliance as far as laying of P2P connectivity using dark fibre is concerned," Sebi said.

Consequently, Sebi has disposed of the instant proceedings initiated against these officials by exonerating them from the allegations charged against them.