Capital market regulator Sebi has passed a settlement order in the case of Trading Access Point (TAP) architecture of National Stock Exchange (NSE), disposing off proceedings against the applicants on October 4.
The regulator on September 20 had issued a notice of demand for Rs 643 crore, and NSE on behalf of itself and other applicants remitted the settlement amount on September 25.
All the applicants except NSE and GM Shenoy have also submitted undertakings for pro bono community service of at least 14 days during the current financial year. The names of other applicants include Vikram Limaye, Umesh Jain, Narayan Neelakantan, VR Narasimhan, Kamala K, Nilesh Tinaikar, R Nandakumar and Mayur Sindhwad.
TAP was a software deployed by NSE in 2008 on the servers of Trading Members to manage connections and orders. Sebi had examined the TAP Architecture to ascertain the following concerns:
- The possibility of a bypass of TAP by the members.
- The manner in which a complaint in November 2013 was dealt with by NSE
- Whether there were lapses by NSE and if such lapses led to any violation of securities laws
While NSE introduced alternatives later on, it continued with TAP till as late as November 2020. After an examination, Sebi issued show cause notice to eleven entities in the matter.
As per Sebi's rules, the following violations were reported by the applicants:
-NSE did not take remedial measures to prevent or discourage any possible bypass of TAP
-Deficiencies of the TAP system were not brought to the notice of NSE’s Standing Committee on Technology
-There was an alleged delay in the appointment of Chief Information Security Officer by NSE
-The Chief Technology Officer (CTO) was not designated as a Key Management Personnel by NSE
-Charges were framed against key NSE employees involved in the complaint
-Charges were framed against subsequent Managing Director / CTO of NSE for delay in discontinuing TAP and not providing the Standing Committee with full picture.
Sebi order added that the regulator reserves the right to take any enforcement action if the disclosures by applicant were not found to be full and true, and if there was a discrepancy in arriving at the settlement terms.
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