Sebi on Friday dismissed regulatory violations charges against the National Stock Exchange (NSE) and its seven former employees, including Chitra Ramkrishna and Ravi Narain, in a 2019 case pertaining to the co-location facility, citing absence of sufficient evidence.

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"Due to the absence of sufficient material/evidence/objective facts on record in this case, the test of 'preponderance of probability' fails to produce enough justification for the establishment of collusion/connivance between OPG (Securities) and its directors with noticees (NSE and its seven employees)," markets regulator Sebi said in its 83-page order.

Apart from NSE, its former MDs and CEOs -- Ramkrishna and Narain, Sebi has dropped charges against Anand Subramanian, Ravindra Apte, Umesh Jain, Mahesh Soparkar and Deviprasad Singh.

The case relates to the alleged preferential access given to certain broking firms, including OPG Securities, in the form of 'dark fibre' at NSE to connect across the colocation facilities before other members.

The latest order came after the Securities Appellate Tribunal (SAT) directed Sebi in January 2023 to review the matter within four months.

Also, the tribunal had directed the WTM to examine the charges of collusion and connivance between OPG and its directors with any employees of NSE.

In its order on Friday, Sebi said there is no dispute to the fact that NSE did not have a detailed defined policy for the use of the Colo facility. It even failed to monitor the use of the secondary server by trading members without having sufficient reason.

However, this fact on its own does not help in deciding the issue of collusion/connivance of OPG and its directors with NSE and its employees.

"The fact that OPG was logging on to the secondary server till May 2015, even after the warning in the first half of June 2012 does indicate indirect consent by NSE to OPG. However, the fact that 93 TMs were logging to the secondary server during this period reduces the probability of collusion/connivance," Sebi said.

Dismissing the charges of regulatory violations, Sebi said that there was no evidence to suggest a violation of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) Regulations or SECC Regulations by NSE and its employees.

"When these evidences/material/objective facts did not lead to violation of PFUTP Regulations or SECC Regulations, they cannot lead to determination of collusion/connivance where the establishment of violation would additionally require the presence of 'conspiracy' or 'secret or indirect consent or permission' making such establishment of violation more difficult," the regulator added.

Last month, sources stated that NSE had begun the process for its long-awaited public offering and reapplied to the Securities and Exchange Board of India (Sebi) for a "no-objection" certificate (NOC) for the IPO.

After receiving the NOC from Sebi, the exchange will draft a prospectus and submit it to Sebi. Once the regulatory review is complete and approval is granted, the exchange will proceed with launching its IPO, they had stated.

NSE's listing has been delayed due to several factors, including investigations into the exchange's preferential treatment of certain entities.

In a separate order, the regulator has directed OPG Securities, Sanjay Gupta, Sangeeta Gupta and Om Prakash Gupta to disgorge Rs 85.25 crore jointly and severally, along with interest at the rate of 12 per cent per annum, calculated from May 22, 2015, till the date of payment. In case, these entities have deposited Rs 7.5 crore with Sebi in compliance with directions of SAT, the total amount payable (excluding interest) by them will come to Rs 77.75 crore.

In addition, Sanjay Gupta has been prohibited from the securities market for six months. The debarment will be in addition to the debarment of five years as directed by 2019 Sebi's order.