NEW DELHI: Capital markets regulator Sebi on Friday imposed a fine of Rs 6 lakh on Pace Stock Broking Services for flouting standards related to co-location of the National Stock Exchange.
The order came after Sebi received several complaints against the broker, relating to allegations of professional misconduct regarding the colocation facility provided by NSE.
Following allegations of preferential access to the Tick-by-Tick data stream given by NSE to certain commercial members, the matter came to the attention of Sebi.
The Advised (Pace Stock Broking) was one of the trading members identified for a thorough investigation (including) a forensic audit for primary and secondary server connections.
The stockbroker connected to the secondary server on foreign exchange derivatives, spot market and futures and options in 2013-2014, in accordance with orders from Sebi.
In accordance with NSE co-location guidelines, the secondary source of TBT (Tick-by-Tick) data should be used when the primary TBT source is not available, and business members should not routinely connect to the secondary server.
Also, according to available records, NSE advised the broker not to connect to the secondary server. However, the broker continued to connect to the secondary server, Sebi noted.
The adviser frequently logged into the secondary server, which violated NSE’s co-location guidelines, thus also failing to exercise skill and diligence in conducting his business operations, he added.
By regularly bypassing the main source, the adviser engaged in behavior that undermined the trading system set up to provide fair and equitable access to all brokers who connected to it.
By such acts, Pace Stock Broking has violated the provisions of the NSE’s Articles of Association and Code of Conduct specified in the Stockbroker Rule as well as the PFUTP (Prohibition of Fraudulent and Unfair Trading Practices) standards.
Meanwhile, in a separate order, the regulator banned nine entities from participating in the capital market for 3 months for price manipulation of Super Sales India Ltd securities.
The order came after Sebi conducted an investigation into business activities in Super Sales India Ltd’s certificate for the period from December 2011 to October 2014.
In another order, the regulator fined Champa Devi Jalan Rs 5 lakh for engaging in inauthentic trading in illiquid stock options at BSE.