May 2 (Mumbai) - India's markets regulator SEBI (Securities and Exchange Board of India) on Tuesday cracked the whip on National Stock Exchange of India Ltd (NSE), directing it to deposit nearly Rs 1,000 crore ( USD 140 million ) in an investor fund and barring it from accessing capital markets for six months, besides clawing back a chunk of salaries from its two former CEOs, for lapses in its algorithmic trading systems and co-location services.
India has two stock exchanges with Bombay Stock Exchange (SENSEX) in Mumbai and National Stock Exchange in capital New Delhi known as nse. This fine is given to nse and its past ceo's have also been fingered. The nse was going for IPO but that has been put off now for atleast 6 months
Former
NSE India CEOs Ravi Narain and Chitra Ramakrishna have been docked a portion of their salaries.
The scam has to do with placement of brokers' servers inside
NSE control room which could have given them an advantage in algo trading.
The Sebi order said
NSE had failed to ensure equal and fair access to all members when they were using its algorithmic trading platform and co-location services. Between 2011 and 2014, under co-location services, some brokers trading from the same premises where NSE’s algorithmic trading servers were located were able to get faster access to the trading systems, thereby gaining an unfair advantage over others.
There has been a crackdown on corruption in India ever since Narendra Modi became Prime Minister in 2014. His leadership has transformed the economy of the country which has now become the fastest growing economy in the world. India's currency has also remained stable around 69 to 1 Dollar during his term as compared to sharp declines during previous governments. Inflation is at all time low and internet data costs are now among lowest in the world. The magnitude of this SEBI fine is unheard of in Indian capital markets which have doubled since Modi became Prime Minister.
India is in middle of elections at the moment which are a 6 weeks affair in a country of 1.2 billion people. Modi's performance is up for election and if he does not win a clear majority, we can expect India to go back to a period of corruption, scams and huge market sell-off. Most of India's opposition parties have come together to stop Modi from winning the election. Many of the opposition leaders are out of bail and have big corruption cases pending against them in court. Judicial process in India is so slow that it can take a life time to get a judgement.
In a way this election is an inflection point on future of India and its economy. Whether we go back to darkness or choose progress is what it is all about.
May 23 the winner of the election will be announced. If it is not Modi, expect a major wheel of growth for global economy to slow down in a big way. Also expect rupee to weaken sharply and inflation to rise.
reporting for easykobo.com on Thursday, May 2 2019 from Lagos, Nigeria