National Stock Exchange admits to trading violations, a day after filing draft IPO papers
An audit conducted by Deloitte found that NSE employees had allowed several brokers privileged access to its database, which is illegal.
The National Stock Exchange on Thursday said that an independent investigation conducted by Deloitte had found trading violations in its operations, a development that is likely to have a negative impact on the Indian bourse’s initial public offering, which is awaiting approval from the Securities and Exchange Board of India. The audit found that a few NSE employees may have allowed several brokers privileged access to its database, the stock exchange said without identifying any suspects, according to Reuters.
In September, SEBI had directed the NSE to set up an independent panel to investigate allegations of trading violations. The bourse said that a specific broker was “almost consistently” given illegal access to its servers for 18 months, which “may not have been possible without the knowledge of certain employees”.
The stock exchange also said that its systems may have been “prone to manipulation”, adding that it would be difficult to track down information related to former employees. Any penalty issued by SEBI “may materially adversely affect our business, in particular our co-location business, our reputation and results of operations”, NSE added.
NSE filed its draft IPO papers with the market regulator on Wednesday. Analysts had predicted that the IPO would raise as much as Rs 10,000 crore. Eight banks, led by Citigroup, Morgan Stanley and Indian investment banks Kotak Mahindra and JM Financial, will coordinate the IPO.
On December 2, NSE Managing Director and Chief Executive Officer Chitra Ramkrishna had resigned from her post citing personal reasons. Reports, however, had suggested that “differences with board members” may have been the cause. Her resignation was a blow to the exchange’s IPO process.
The NSE was set up as a competitor to the Bombay Stock Exchange in 1992 and soon grew to become the leading stock exchange platform in India.