Mumbai, June 18 (IANS). The National Stock Exchange (NSE) in its DRHP (Draft Red Herring Prospectus) said that the co-location and dark fiber issue still remains unresolved and the exchange is proposing to pay Rs 1,491.21 crore to settle the matter with the Securities and Exchange Board of India (SEBI).
This information given in the ‘Important Legal Matters’ section of the IPO papers is related to the proceedings going on before the Supreme Court, SEBI and other legal forums.
In the Dark Fiber case, regulator SEBI had raised concerns that some trading members were given exclusive point-to-point connectivity through an unauthorized service provider, which allegedly gave them a latency advantage over other market participants.
In April 2019, a whole-time member of SEBI directed NSE to return Rs 62.58 crore along with interest and conduct periodic audit of the exchange’s network architecture.
Subsequently, SEBI imposed a fine of Rs 7 crore through a separate legal proceeding in June 2022.
However, later the Securities Appellate Tribunal (SAT) canceled both the orders, after which SEBI challenged these decisions in the Supreme Court.
The appeals are still pending, meanwhile NSE submitted a settlement proposal of Rs 222.66 crore in June 2025, which was revised to Rs 267.65 crore in March 2026. The settlement application is yet to receive final approval.
The second case pertains to allegations of NSE providing preferential access and faster connectivity to certain trading members through its co-location facility operating under the ‘tick-by-tick’ architecture.
In April 2019, SEBI ordered the exchange to return Rs 624.89 crore with interest and issued certain non-monetary directions.
Also, the regulator held that SNE had not violated SEBI (Prohibition of Fraudulent and Unfair Trading Practices) regulations.
In January 2023, the SAT overturned the order to return the money and ruled that NSE had not violated key provisions of the Stock Exchange and Clearing Corporation Rules.
However, it directed the exchange to deposit Rs 100 crore in the ‘Investor Education and Protection Fund’. In a separate decision, SAT also canceled the penalty of Rs 1 crore imposed by SEBI.
After this, SEBI challenged both the orders of SAT in the Supreme Court. To resolve the dispute, NSE proposed a settlement amount of Rs 1,164.73 crore in June 2025, which was later increased to Rs 1,223.56 crore in March 2026.
According to DRHP, appeals and settlement applications are still pending in the Supreme Court in cases related to co-location.
The total amount of revised settlement offers in co-location and dark fiber cases is Rs 1,491.21 crore.
The actual additional cash outflow for NSE may be less, as the exchange has already deposited a huge amount with SEBI.
According to financial information released in August 2024, the amount deposited with the market regulator was about Rs 1,107 crore.
–IANS
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