Synopsis: SEBI has imposed a ?25 lakh fine on the Bombay Stock Exchange (BSE) for failing to ensure equal and transparent access to corporate disclosures and for weak supervision of broker trades. The penalty follows a probe covering February 2021 to September 2022.
In a significant move to uphold market integrity, the Securities and Exchange Board of India (SEBI) on Wednesday imposed a ?25 lakh penalty on BSE Ltd, citing multiple violations of stock exchange operational norms, including early access to price-sensitive corporate information, poor oversight on broker activity, and inadequate risk controls.
This action comes after SEBI conducted an inspection between February 2021 and September 2022, followed by the issuance of a show-cause notice to BSE.
Key Findings by SEBI:
- Corporate Announcements Leak: BSE's system allowed paid clients and internal employees of its Listing Compliance Monitoring (LCM) team to access corporate announcements before they were made public on the BSE website, compromising the fairness of the disclosure process.
- No RSS Feed Setup: SEBI also highlighted BSE’s failure to establish an RSS feed, a tool that ensures all users receive updates simultaneously, potentially preventing information asymmetry.
- Lax Broker Oversight: BSE was also pulled up for weak supervision of broker trades, especially concerning client code modifications, which are meant only for genuine errors. Many of these modifications were not scrutinized, and error accounts were poorly monitored.
- Negligent Attitude: The order strongly criticized BSE’s "lethargic approach" to its regulatory duties as a first-level market regulator. SEBI stated that the selective access to sensitive data undermines transparency, impartiality, and investor trust.
SEBI’s Official Statement:
“This case involves multiple acts of omissions, laxity and negligence… which cannot be allowed to be exonerated,” SEBI stated, adding that BSE's failure to establish robust systems for information handling left visible scope for misuse.
Disclaimer: This article is intended for informational purposes only. Readers are advised to refer to official SEBI documents or consult a financial expert for specific advice or investment decisions.
