Securities and Exchange Board of India (SEBI) has imposed a fine of Rs 25 lakh on BSE. SEBI has found deficiencies in the exchange disclosure system and compliance process in its investigation. SEBI has imposed a fine of Rs 15 lakh on BSE to fail to provide equal and fair access to corporate announcements under Section 23H of the Securities Contracts (Regulation) Act. At the same time, a fine of Rs 10 lakh has been imposed under Section 15HB of SEBI Act for violation of circulars issued in 2004, 2011 and 2021.
SEBI conducted its inspection during February 2021 to September 2022. During this period, BSE’s System Architecture provided the listing complication of the exchange to the Compliance Monitoring Team and paid clients before the access of corporate filing, these filing before the public became public. SEBI found that the BSE process lacked a uniform push mechanism for all users.
SEBI also found that BSE failed to take action against brokers who often changed the client code. In addition, the exchange did not have enough review of trades made from error accounts and allowed changes in the code between unrelated institutional clients without proper investigation.
In his cleanliness, BSE says that the violations were technical and they neither suffered any damage to investors nor any unfair advantage to the exchange. The exchange also said that corrective steps were taken. The difference in data delivery was often of militarycandes and that too was not intentionally. This difference came due to server architecture and delay in shoing.
But SEBI does not agree with these arguments of BSE. SEBI says that BSE’s action was not in line with its responsibilities as a first level regulator and market infrastructure institution. It is the responsibility of BSE to maintain a system that does not allow any kind of access to be created before the other people till the price sensitive information. Whether it is intentionally or unknowingly.
