A Bench of Justices M Sathyanarayanan and N Seshasayee has issued notice to the National Stock Exchange (NSE), the Securities Exchange Board of India (SEBI), the Enforcement Directorate (ED), the Central Bureau of Investigation (CBI), the Serious Fraud Investigation Office (SFIO) and the Financial Intelligence Unit (FIU) on September 27.

The CFMA’s plea is said to have recounted that the NSE had given preferential access to certain trade members to access its trade data at the cost of the entire securities market. While contending that the same may comprise one of the biggest financial frauds to have ever taken place, grievance has been raised that the SEBI has not taken any effective steps to unearth the massive colocation scam.

Further, the Bench was also informed that the investigation being conducted by the CBI in the matter is showing slow progress, prompting the CFMA to approach the Court.

In view of the same, the Court issued notice in the matter, returnable by November 11.

The NSE co-location scam concerns market manipulation and irregularities concerning the colocation facility provided by the NSE, whereby select players obtained market information ahead of others allowing them to front run the rest of the market.

In a recent development, the SEBI passed five punitive orders against NSE and others involved in April this year. This includes two orders imposing fines, one for the payment of Rs. 624.89 crores (along with interest) and another for an amount of Rs 62.58 Crores. Other directions include a ban on NSE from accessing the securities markets and ban on launching new derivative products for six months.

bar and bench