Capital markets regulator Sebi on Friday imposed a Rs 6 lakh penalty on Pace Stock Broking Services for flouting norms related to National Stock Exchange's co-location facility.
The order came after Sebi received multiple complaints against the broker, pertaining to allegations of malpractices with respect to the co-location facility provided by NSE.
In the wake of allegations of preferential access to the Tick-by-Tick data feed given by NSE to certain trading members, the matter was taken up for investigation by Sebi.
The noticee (Pace Stock Broking) was one of the trading members identified for comprehensive investigation (including) forensic audit for primary and secondary server connects.
The stockbroker logged into the secondary server in currency derivatives, cash market and Futures and Options during 2013-2014, as per Sebi orders.
As per NSE's co-location guidelines, the secondary source for TBT (Tick-by-Tick) data is to be used in the event of non-availability of the TBT primary source and trading members should not routinely connect to the secondary server.
Further, as per available records, NSE advised the broker not to connect to the secondary server. However, the broker continued to log in to the secondary server, Sebi noted.
The noticee connected frequently to the secondary server, which violated the NSE co-location guidelines, thereby also failing to exercise due skill care and diligence in conducting its trading operations, it added.
By circumventing the primary source regularly, the noticee engaged in conduct, which undermined the trading system set up to provide fair and equitable access to all brokers who connected to it.
Through such acts, Pace Stock Broking violated the provisions of the NSE By-laws and code of conduct specified under the stockbroker rule as well as PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) norms.
Meanwhile, in a separate order, the regulator has barred nine entities from participating in the capital market for 3 months over price manipulation in the securities of Super Sales India Ltd.
The order came after Sebi conducted an investigation into the trading activities in the scrip of Super Sales India Ltd for the period December 2011 to October 2014.
In another order, the regulator has levied a fine of Rs 5 lakh on Champa Devi Jalan for indulging in non-genuine trades in illiquid stock options at BSE.