The Madras High Court ordered notice to Securities Exchange Board of India (Sebi) on a writ petition filed by a lawyer seeking appropriate action against National Stock Exchange (NSE) employees for the alleged fraud in co-location services which reportedly led to loss of trillions of rupees to millions of customers.
Justice T. Raja sought the response of Sebi within four weeks on a writ petition filed by advocate A. Kumar, 26, of Chennai who claimed that Sebi should take action against the individuals concerned irrespective of a criminal case booked and investigated by the Central Bureau of Investigation (CBI) on the issue.
Appearing on behalf of the petitioner, senior counsel P. Wilson contended that the NSE had introduced co-location services in 2010 without the approval of Sebi.
The facility allowed members to rent rack space with low latency connectivity to the exchange and Sebi regulations were violated in implementing the services.
It was only in 2015 that a whistleblower brought out various illegal practices of NSE employees, including grant of preferential access to data dissemination servers given to select stock brokers.
Though the petitioner had given a representation to SEBI on July 5 for appropriate action, action was yet to be taken, he alleged.