Capital markets watchdog Sebi on Monday imposed a penalty of Rs 6 lakh on Parwati Capital Market Pvt Ltd in the NSE co-location case.
Sebi had received multiple complaints pertaining to alleged malpractices with respect to the co-location facility being provided by the National Stock Exchange of India Ltd (NSE).
In the wake of the allegations of preferential access to tick-by-tick data feed given by NSE to certain trading members (TMs), the matter was taken up for investigation by the regulator.
Parwati Capital Market was one of the trading members identified for comprehensive investigation for primary and secondary server connects.
As per NSE's co-location guidelines, secondary server was provided by the exchange in order to enable members to connect to the server in case of disconnection or failure to connect to the primary server.
The rules provide that trading members should not routinely connect to the secondary server.
However, the entity continued to log-in to the secondary server in various segments without valid reasons. NSE had also reprimanded it for connecting to the secondary server.
"The Noticee connected frequently to the secondary server in violation of the NSE colocation guidelines, thereby also failing to exercise due skill care and diligence in conducting its trading operations," Sebi said in an order.
Noticee here refers to Parwati Capital Market Pvt Ltd.
By circumventing the primary source on a regular basis, it engaged in conduct which undermined the trading system set up to provide fair and equitable access to all brokers who connected to it, it added.
Consequently, a total fine of Rs 6 lakh has been levied on Parwati Capital Market.
In a separate order, Sebi levied a fine of Rs 10 lakh, to be paid jointly and severally by nine entities for indulging in fraudulent trading in 20 Microns Ltd's scrip.
They violated Prohibition of Fraudulent and Unfair Trade Practices norms by engaging in manipulation of the scrip price of 20 Microns Ltd, Sebi noted.
The order follows an investigation conducted during July 2014-October 2015.
The nine entities include Viking Industries Pvt Ltd and eight individuals.