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Informist, Thursday, Jun. 18, 2026

MUMBAI – The settlement application of INR 12.24 billion filed by the National Stock Exchange of India Ltd. with the Securities and Exchange Board of India to close the market regulator's pending appeal in the Supreme Court in the main co-location case is currently pending, according to disclosures by the exchange in its draft red herring prospectus for an initial public offering.

The NSE's settlement application of INR 2.68 billion to close SEBI's pending appeal in the Supreme Court in another co-location related dark fibre case is also pending, the exchange said in the draft IPO prospectus. "The outcome of the appeals and settlement applications pending before the Supreme Court of India and SEBI, respectively, remains uncertain...," NSE said in the draft IPO prospectus.

The main co-location case refers to SEBI's order of Apr. 30, 2019, directing NSE to disgorge INR 6.25 billion, along with interest at 12% per annum from Apr. 1, 2014. SEBI had alleged in this order that the NSE had allowed preferential connectivity to select brokers to the tick-by-tick data dissemination servers in its co-location facility, which allegedly resulted in these brokers making substantial profits.

On appeal by the NSE, the Securities Appellate Tribunal had in its ruling of Jan. 23, 2023, set aside SEBI's order. The market regulator had then lodged an appeal in the Supreme Court against the tribunal's ruling and the appeal is currently pending in the court.

The dark fibre case, also referred to as the lease lined connectivity case, refers to SEBI's order of Apr. 30, 2019, directing the NSE to disgorge INR 626 million, along with interest at 12% per annum from Sept. 11, 2015. SEBI had alleged in this order that NSE had provided preferential treatment to two brokers when it allowed them to utilise the services of an unlicensed telecom service vendor to connect their co-location servers in NSE with that of BSE Ltd.'s co-location server through the facility of point-to-point connectivity.

On appeal by NSE, the Securities Appellate Tribunal had in its order of Aug. 9, 2023, quashed the disgorgement directions of SEBI in this case. This order of the tribunal too was appealed by SEBI in the Supreme Court and the case is currently pending.

The exchange also listed in its draft IPO prospectus a few regulatory cases in which it had paid various settlement amounts to SEBI to close the cases. It paid SEBI INR 404 million in July 2025 to settle inspection-related proceedings against it for alleged violations during February 2021-March 2022 involving data storage outsourcing without legally binding contracts, gaps in client code modification practices, waiver of penalty without approval of the core settlement guarantee fund committee, and deficiencies in due diligence mechanisms.

In September-October 2024, the NSE had paid SEBI INR 6.43 billion to close the market regulator's proceedings against it and a few officials for alleged problems with NSE's software application called trading access point architecture and network connectivity, which was deployed by the exchange in 2008 on the servers of trading members for managing connections, and order and trade messages.

Further, in June 2023, NSE and its wholly-owned subsidiary NSE Clearing Ltd. had cumulatively paid SEBI INR 726 million to settle the market regulator's show-cause notice in August 2021 for alleged breach of regulations in a matter of trading halt on Feb. 24, 2021, due to failure of the exchange's systems. The NSE had argued in that case that the problems were due to "certain issues in the links with telecom service providers, which in turn impacted the Storage Area Network system of our Company, resulting in the primary SAN becoming inaccessible to the host servers."

With regard to a key case relating to the Karvy Stock Broking scam and SEBI's orders in the matter, the NSE said in its draft IPO prospectus said that it had filed a commercial suit in the Bombay High Court in November 2023 against Karvy Stock Broking, Karvy Realty (India) Ltd., and Karvy Capital Ltd. to jointly pay NSE INR 14.43 billion as per SEBI's order in April 2023 against Karvy Stock Broking. SEBI had ordered Karvy Realty (India) to return INR 10.94 billion, and also ordered Karvy Capital to return INR 3.49 billion to Karvy Stock Broking.

The brokerage firm had transferred these amounts to Karvy Realty and Karvy Capital during 2016 to 2019 from the funds it got from fraudulently pledging clients' securities to borrow funds from banks and non-banking finance companies. In its order, SEBI had directed the NSE to take control over the assets of these two Karvy group companies to recover the money if they did not comply with SEBI's directions within three months from the order.

The NSE said in its draft IPO prospectus that in this court case, it had also sought a warrant of attachment over all assets of Karvy Realty and Karvy Capital. This court case is still pending, the exchange said.  End

Reported by Rajesh Gajra

Edited by Avishek Dutta

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