The Supreme Court has directed the country’s market regulator, SEBI, to refund ₹300 crore to NSE which the exchange had deposited under orders by the Securities Appellate Tribunal (SAT) as “disgorgement”.

What Happened? The Supreme Court of India declined to stay an order passed by SAT, which had set aside SEBI’s order in the NSE co-location case.

Back in January 2023, SAT had set aside SEBI's order in the NSE co-location case for disgorging ₹625 crore along with interest. However, the tribunal had directed the NSE to pay ₹100 crore towards SEBI’s Investor Protection and Education Fund for its failure on the due diligence front.

The calculations in the case date back to 2019 when in compliance with SEBI’s order, the NSE deposited ₹1,044 crore with the regulator. After this, the appellate tribunal held that the exchange needs to deposit only ₹100 crore. Now, the Supreme Court has directed SEBI to return ₹300 crore to the NSE from the ₹944 crore it has lying.

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SEBI’s 2019 order was based on complaints made in 2015 that the NSE gave preferential access to some co-location clients, thereby allowing them an unfair trading advantage.

Subsequently, SEBI penalised the stock exchange for violating its ‘Stock Exchange and Clearing Corporation’ regulations. The market regulator had ordered the NSE to disgorge ₹624.89 crore with 12% interest per annum from April 2014. Given SEBI’s order came through in 2019, the NSE had deposited ₹1,044 crore with the regulator.

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