Latest SAT relief colocation matter to free up Rs 1,000 cr for NSE

Tribunal prunes penalty on bourse from Rs 1,100 cr to just Rs 100 cr; Sebi told to refund excess amount in six weeks along with interest

The latest relief to the National Stock Exchange (NSE) from the Securities Appellate Tribunal (SAT) in colocation matter is likely to free up over Rs 1,000 crore -- money that the exchange has parked with the Securities and Exchange Board of India (Sebi).

According to the financial results for the quarter ended September 30 (Q2), the NSE had a total amount of Rs  1,108 crore deposited with the markets regulator as a part of the penal action taken by Sebi in 2019.

While setting aside the disgorgement order, the SAT had reduced the penalty on NSE to just Rs 100 crore for certain lapses on its part. “The direction for disgorgement was unwarranted but the appellant NSE cannot be allowed go scot free and is required to pay a price for the lack of due diligence on account of human failure to comply with the circular in letter and spirit…we are of the opinion that NSE should pay a sum of Rs 100 crore for this lapse which is not expected from a first level regulator and which would act as a deterrent,” SAT said in a 235-page order dated January 23.

The tribunal directed Sebi to adjust the Rs 100 crore penalty from the money already deposited by NSE. Sebi has also been directed to refund the excess amount within six weeks along with interest accrued.

The amount set to be returned is equal to two-thirds of the profits earned by the exchange during Q2. NSE recorded a profit of Rs 1,774 crore during Q2 on a total income of Rs 3,372 crore.

In its order dated April 30, 2019, the market watchdog had asked NSE to disgorge Rs 624 crore, with an interest of 12 per cent calculated from April 1, 2014. The total disgorgement would have come to over Rs 1,185 crore had the tribunal not set aside the order.

Pursuant to previous interim orders of the tribunal in May, 2019 and May, 2021, the exchange had deposited the said amount with the market regulator.

Story so far
 

NSE had a total amount of Rs 1,108 crore deposited with the Securities and Exchange Board of  India (as part of the penal action)
 

The regulator has been asked to adjust Rs 100 crore penalty from the deposited amount and directed to refund the excess amount within six weeks
 

Amount set to be returned equals two-thirds of the profits earned by NSE in Q2FY23