Sebi orders back-to-school, community services for exchange, clearing house chiefs

The senior execs have been asked to complete appropriate courses. (Photo by Kindel Media/Pexels)

It might be a first. The markets watchdog has asked senior market-infrastructure executives to take up community services like investor awareness programmes to settle a trading shutdown triggered by a tech glitch in February 2021.

On June 20, Securities and Exchange Board of India (Sebi) issued a settlement order on the failure of systems at the National Stock Exchange (NSE) and NSE Clearing (NCL), following a technical problem that caused trading to be stopped for a few hours on February 24, 2021. It had a monetary part and a non-monetary part in it, suggested a high-powered advisory committee headed by a retired high court judge.

Also read: NSE trading interruption: What exactly is a technical glitch, how does it impact investors, and other questions answered

The committee left the details of the non-monetary part to Sebi, and the Board didn’t disappoint.

The service should be towards investor education and awareness, by actively contributing to specified programmes that are conducted by and monitored under the aegis of Sebi's Office of Investor Assistance and Education (OIAE), the June 20, 2023 order said.

The community service could still be borne with. It might even be great for the soul. What could be hard to take is the market regulator saying that the executives should take up and pass — yes, the order says, “and pass”, like there was a possibility that it may not happen — appropriate courses.

What the courses are, the order, however, does not specify.

Wonder what former NSE managing director and chief executive Vikram Limaye, NCL Managing Director Vikram Kothari and NSE Chief Operating Officer and Chief Technology Officer Shiv Kumar Bhasin could be thinking about the order? Will they like to go back and give tests? Who does?

According to the order, the NSE and NCL had to part with over Rs 72.64 crore and then agree to these “non-monetary settlement terms”.

There was a list of failures that were placed on the institutions’ door, following the Sebi investigation. They included NSE and NCL's failure to monitor services of vendor in respect of Core and Critical activities of the two entities, and asked the institutions concerned to ensure systems preparedness and readiness to move operations to DRS, secure orderly execution of trades, on-line/real time risk management of trades and market integrity, guarantee “no single point of failure” and to recover operations within RTO of four hours. The senior executives were found wanting as part of the crisis management team (CMT).

According to the order, all five applicants/noticees (including NSE and NCL) offered to settle “without admitting or denying the findings of facts and conclusions of law”. This is an option given under the Sebi (Settlement Proceedings) Regulations, 2018.

Also read: NSE technical glitch | A look at some of the past instances of trading glitch globally

What lies in store for them?

After they are done with their courses, they have 14 days of community service that they have to complete over the next year.

Maybe they will hold seminars or will partner with Aiyyo Shraddha for an investor-awareness series — Money Minded Malini. The latter might be more fun to do, and since the three are veterans in their fields, investors only stand to gain.