SEBI slaps ₹12L fine on NSE subsidiary for regulatory violations
The Securities and Exchange Board of India (SEBI) has imposed a penalty of ₹12 lakh on NSE Data & Analytics Limited, a fully-owned subsidiary of the National Stock Exchange (NSE). The fine was levied due to multiple regulatory violations committed by the company. Previously known as DotEx International, NSE Data & Analytics is a provider of data products for NSE.
SEBI identifies non-compliance with disaster recovery guidelines
SEBI's probe showed that NSE Data & Analytics didn't stick to its own rules about disaster recovery and business continuity plans. The company also messed up by taking way too long to send out acknowledgement letters to investors. There were 61 cases where these delays went from 13 to 178 days, making the regulatory violations SEBI found even worse.
Gaps in cybersecurity framework and system audits
SEBI's investigation also revealed cracks in NSE Data & Analytics's cybersecurity setup and system checks. They found problems that weren't fixed and an inability to accurately highlight these issues in audit reports. On top of that, the firm didn't validate its Know Your Customer (KYC) records according to SEBI rules, adding yet another instance of non-compliance to its growing list of regulatory violations.
Irregularities in segregating operations and infrastructure
SEBI has pointed out some issues with how NSE Data & Analytics set up its operations and infrastructure, which led to more non-compliance. In response to SEBI's show-cause notice, the company argued that these violations were either procedural or due to delays in manual processes. They also emphasized that these lapses didn't harm investors in any significant way, and that corrective measures were taken immediately.
SEBI dismisses company's arguments, upholds penalty
Despite NSE Data & Analytics's arguments and corrective measures, SEBI maintained that the violations were severe and warranted penal action. The regulator emphasized that as a registered intermediary, the firm was obligated to adhere to SEBI's regulations and maintain a high degree of professionalism. SEBI further said that these violations could not be taken lightly as they undermined the integrity of the securities market.
