The Securities and Exchange Board of India (SEBI) has imposed a Rs 25 lakh penalty on the Bombay Stock Exchange (BSE) for failing to provide equal access to corporate disclosures and inadequate oversight of trading practices.
SEBI stated in its order that listed companies' corporate announcements were made available to employees of the BSE's Listing Centre Module (LCM) and paid subscribers before being published on the exchange's official website. SEBI found that selective access undermined the principles of fairness, transparency, and impartial information dissemination.
Key Highlights:
- SEBI fines BSE ₹25 lakh for granting paid clients early corporate disclosure access—violating fair-access norms.
- BSE also failed oversight, neglecting to monitor frequent client code changes and error-account misuse.
Thae regulator also chastised the BSE for failing to take action against brokers who repeatedly changed client codes during trades, describing the situation as "laxity and negligence." It emphasized that the BSE, as a first-tier regulator, bears a fiduciary responsibility to ensure a fair and trustworthy market ecosystem.
"This case involves multiple acts of omission, laxity, and negligence, characterized by a sluggish demeanor that cannot be justified. "If such regulatory oversight is allowed to continue unchecked, it risks undermining the credibility of both the BSE and SEBI," the order stated.
Despite acknowledging that BSE has since implemented corrective measures, such as introducing a time gap in the release of information to paid clients, SEBI claimed that violations of Regulation 39(3) of the SECC Regulations occurred prior to its intervention.
The BSE argued that there was no regulatory mandate to provide information via RSS feeds. However, SEBI clarified that the absence of a statutory requirement does not absolve the exchange's responsibility to ensure fair access to all market participants.
"As a Market Infrastructure Institution (MII), the BSE is held to a higher standard of transparency. SEBI stated that any system that allows privileged early access, even if for technical reasons, must be corrected in order to maintain market trust.
Santosh Shukla of SEBI resolved the case by imposing monetary penalties under Section 23H of the SCRA and Section 15HB of the SEBI Act, rather than harsher penalties, while emphasizing the gravity of the violations.
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SEBI stated that the BSE must remit the penalty amount within forty-five (45) days of receiving this order via an online payment facility available on its website.
"If the said amount of penalty is not paid within 45 days of receipt of this order, recovery proceedings may be initiated under section 28A of the SEBI Act, 1992 for realization of the said amount of penalty along with interest thereon, inter alia, by attachment and sale of BSE's movable and immovable properties," it stated.
