The Securities and Exchange Board of India (SEBI) on Wednesday, June 25, fined the Bombay Stock Exchange (BSE) a total of ₹25 lakh following an inspection that flagged gaps in the exchange’s disclosure system and compliance processes.
A ₹15-lakh penalty under Section 23H of the Securities Contracts (Regulation) Act was for BSE’s failure to provide equal and fair access to corporate announcements.
During the inspection period between February 2021 and September 2022, BSE’s system architecture allowed its listing compliance monitoring team and paid clients to access corporate filings before they were made publicly available on the exchange website.
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The process lacked a uniform push mechanism for all users and relied on a manual pull for the website, which created the possibility of information reaching select users a few seconds earlier.
Further, the market regulator also found that BSE failed to act against brokers who frequently modified client codes, did not adequately review trades routed through error accounts, and allowed code changes between unrelated institutional clients without proper due diligence.
These failures led to a separate ₹10 lakh penalty under Section 15HB of the SEBI Act for breaches of circulars issued in 2004, 2011, and 2021.
The exchange argued that the violations were technical, did not lead to any investor loss or unfair gain to the exchange, and that corrective steps had been implemented. It also said the data dissemination gaps were not deliberate and that the timing differences were often in milliseconds, caused by server architecture and syncing delays.
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SEBI disagreed, calling BSE’s actions inconsistent with its role as a first-level regulator and market infrastructure institution. It said the exchange had a responsibility to maintain systems that do not create any possibility of selective access to price-sensitive information, even unintentionally.
Shares of BSE Ltd ended in the green at ₹2,789 apiece today.
(Edited by : Shoma Bhattacharjee)
