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Informist, Wednesday, Jun. 25, 2025

 

NEW DELHI – The Securities and Exchange Board of India has imposed penalties of INR 2.50 million on BSE Ltd. for multiple acts of omission, laxity, and negligence with respect to handling of corporate announcements of listed companies as part of their stock exchange filings and with regard to a couple of other rules. In an order passed Wednesday imposing the penalties, SEBI said the main breach by BSE was that as a stock exchange its system architecture before September 2023 did not ensure equal, unrestricted, transparent, and fair access to all persons to information and data from corporate announcements of listed companies.

 

According to SEBI, BSE's paid clients and its own listing compliance monitoring team were able to view the information and data from the listed companies' filings before the same was available to the public and viewers on BSE's website. Although SEBI ruled out any breach of insider trading regulations arising from unfair access to unpublished price-sensitive information by the paid clients or by BSE officials because of the lack of specific evidence, it found the exchange's acts and commissions had violated the provisions of the Securities Contracts (Regulation)(Stock Exchange and Clearing Corporations) Regulations, 2018.

 

The instances of breach of regulations and circulars alleged against BSE emanated from SEBI's inspection of the stock exchange for the period from Feb. 1, 2021, to Sept. 30, 2022. Following this inspection, SEBI initiated proceedings under its adjudication rules and issued a show-cause notice to BSE on Sept. 23, 2024.

 

Apart from unequal and unfair access to announcements filed by listed companies with BSE, SEBI's order Wednesday said BSE failed to periodically review the trades flowing into the error accounts of all brokers to ensure that such trades were liquidated subsequently in the market and not shifted to other clients.

 

SEBI said that within three days of its inspection report, BSE put in place a system to track, on a daily basis, whether trades flowing into error accounts were being liquidated within three working days. This, according to the market regulator, "showed laxity and lethargic indifference and negligence for years".

 

SEBI also found BSE guilty of allowing client code modifications for trades between two unrelated institutional clients without performing due diligence. The due diligence required on the part of BSE was verification of the genuineness of the client code modification and levy of penalties where such genuineness was lacking.

 

SEBI said in Wednesday's order that BSE's omissions, negligence, and lethargic approach "cannot be allowed to be exonerated if the first level regulator having paramount duties of regulation and oversight shows such approach of lax regulation leaving visible scope for misuse of its systems."

 

Wednesday, shares of BSE ended slightly higher at INR 2,789.00 on the National Stock Exchange.  End

 

Reported by Rajesh Gajra

Edited by Rajeev Pai

 

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