Sebi's External Panel Recommends NSE To Pay Rs 1,880 Crore As Settlement For Co-Location Case

The Securities and Exchange Board of India (Sebi) has recommended that the National Stock Exchange (NSE) settle pending legal disputes related to the co-location case by paying around Rs 1,880 crore, according to several reports. This would bring the world’s largest derivatives exchange to resolving its long-standing dispute with the market regulator.

A High-Powered Advisory Committee (HPAC) of Sebi recommended a settlement amount to the National Stock Exchange (NSE) after the exchange filed a settlement application in June last year. In its application, NSE had offered to pay Rs 1,387.39 crore to close the matter. Sebi had alleged governance lapses by NSE and said it had failed to provide equitable access to all trading members in the co-location case.

The co-location and dark fibre case was based on allegations that certain brokers received preferential and faster access to market data, which gave them an unfair trading advantage. The case originated when a whistle-blower in 2015 claimed that certain entities gained early access to NSE’s data feed through specific server connections and unauthorised vendors. The prolonged case has also delayed NSE’s long-standing intent to tap the primary market with its initial public offering (IPO) for nearly 10 years.

Of the Rs 1,880 crore recommended as settlement by the external panel, around Rs 1,200 crore is likely to be for disgorgement, and around Rs 380 crore towards interest payment, while the remaining amount was determined under other terms of settlement. Under Sebi’s settlement framework, the settlement amount begins with a base penalty and is then adjusted for severity, timing of settlement, and past violations to reach the final payable amount for settlement.

The recommendations made by the external panel have been sent for approval to a panel of Sebi’s whole-time members, who have the final authority to accept or reject the settlement application. Sebi is expected to issue a demand letter to NSE to deposit the money soon, before issuing an order to finalise the settlement amount, according to reports. NSE does not have to admit or deny guilt as per the settlement process.

NSE had appointed 20 banks last month to manage its IPO. The banks sent out letters to the exchange’s current investors inviting them to sell shares in the IPO, and the deadline for expressing interest was set for April 27, 2026, according to a recent report by Reuters. As India’s largest exchange, the NSE is also the largest unlisted Indian firm, with around 190,000 investors.