Twelve officials of the National Stock Exchange (NSE) have approached market regulator SEBI for a consent settlement in the probe relating to high-frequency trading systems.
The stock exchange has already filed for consent with the Securities and Exchange Board of India (SEBI).
At least 14 NSE officials, including former CEO Ravi Narain, had received a show-cause notice from SEBI for their alleged role in giving preferential access to certain brokers in the exchange’s co-location facility. A show-cause notice to individuals relates to their culpability in the official position and has exposed NSE to a possible penal action even if consent is accepted. The two officials who have not yet filed for consent are expected to do so soon.
A source close to the development said each person had a different deadline for filing for consent.
Those who receive a show-cause notice can approach the regulator for consent within three weeks. The consent clause enables most alleged offenders to get away by paying a penalty without accepting or denying guilt. However, pegging a penalty figure can be tricky for SEBI as this is usually based on the loss caused to investors on a wider scale.
Although a whistle-blower had alerted SEBI in 2015 to the rigging of high-frequency trading systems, the probe gathered steam only after Ajay Tyagi took charge as Chairman this year. The alleged rigging occurred between 2011 and 2014.
“It is the right of anybody being investigated by SEBI to seek consent. If the exchange has filed for consent, the others being probed can seek the same course,” said Kumar Desai, an advocate at Bombay High Court.
Former SEBI Executive Director JN Gupta said: “SEBI should offer the same treatment to all those seeking consent in the matter.”
NSE did not respond to an email query.