Capital markets regulator Sebi on Thursday imposed penalties totalling Rs 11 crore on 8 entities, including National Stock Exchange (NSE) and its former chiefs Chitra Ramkrishna and Ravi Narain, in a case pertaining to software related to algorithmic trading.
The regulator has levied a fine of Rs 1 crore each on NSE, Ramkrishna and Narain.
Also, a fine of Rs 1 crore has been imposed on Suprabhat Lal, who was a NSE official at the time of violation.
Also, the regulator slapped a penalty of Rs 3 crore on Ajay Shah, who was on the board of NSE's subsidiary NSSCL, Rs 2 crore on Infotech Financial Services Ltd, a company which was in the business of developing algorithmic software and selling it to market participants.
A fine of Rs 1 crore each has been imposed on the latter's directors -- Sunita Thomas and Krishna Dagli.
Sunita Thomas is the wife of Suprabhat Lal and sister-in-law of Ajay Shah.
The case relates to NSE not awarding the contract for computing Liquidity Index (LIX) to its own specialised subsidiary, IISL.
The contract was awarded to Infotech indicating the undue support provided by the exchange to Infotech and Ajay Shah.
Further, NSE and its then officials -- Narain and Ramkrishna -- failed to take cognizance of the issues of conflicts of interest with respect to Ajay Shah, Sunita Thomas, Suprabhat Lala and Infotech.
"Ajay Shah, Infotech, Sunita Thomas and Krishna Dagli have collusively worked to fulfil their commercial goals by fraudulently using the data that was obtained by them from NSE to develop algo trading software," Sebi said in its 86-page order.
Further, the regulator said that Ajay Shah and Infotech along with its directors made huge unfair gains by preparing software related to algorithmic trading at the cost of other investors who did not have the access to such softwares developed on the basis of confidential data shared by NSE.
Further, there is a charge against Ajay Shah that he, in connivance with Infotech, its directors and with NSE and its officials, employed a device/scheme/artifice wherein the confidential and sensitive data provided by NSE for being used for research for LIX project was misused for creating algo trading software for sale to market participants for dealing in securities market.
