The Securities and Exchange Board of India (Sebi), the country’s capital markets regulator, has fined the Bombay Stock Exchange (BSE) ₹25 lakh for not following important rules.
Why the Fine?
Sebi found that between February 2021 and September 2022, BSE gave early access to important company announcements to a few paid clients and its internal team. This information should have been shared with everyone at the same time through BSE’s website, but it wasn’t. This gave some people an unfair advantage, which goes against fair market practices.
What Did Sebi Find?
- BSE’s systems allowed a few people to see corporate news before it was made public.
- BSE did not have strong safeguards to make sure everyone got the same information at the same time.
- It also failed to set up an RSS feed, which could have helped share information equally.
- Though BSE later made some changes, Sebi said the action came too late and only after the issues were pointed out during the inspection.
Issues with Trade Monitoring
Sebi also found problems with how BSE monitored trade activities. It allowed brokers to frequently change client codes in trades, which is only allowed in rare, genuine cases. But BSE did not take strict action or keep a close watch on these changes. This raised concerns about possible misuse and lack of seriousness in keeping the market clean.
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What Sebi Said
Sebi’s official, Santosh Shukla, said stock exchanges like BSE play a very important role in handling sensitive company information. BSE should have had better systems to ensure that all investors, big or small, get the same information at the same time.
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He added that giving early access to some people harmed the fairness and trust in the market. BSE also showed carelessness in monitoring trading activities and didn’t follow proper rules.
