Mumbai— The Securities and Exchange Board of India (SEBI) has imposed a ₹25 lakh penalty on BSE Ltd for multiple regulatory violations, including improper handling of price-sensitive information, inadequate supervision of broker trades, and failure to enforce corrective measures.
The action stems from a SEBI inspection conducted between February 2021 and September 2022. Following the review, the regulator issued a show cause notice to the exchange.
SEBI’s investigation found that BSE’s internal system architecture gave its paying clients and members of its Listing Compliance Monitoring (LCM) team access to corporate announcements before they were publicly disclosed on the exchange’s website.
The regulator emphasized that the data dissemination process lacked safeguards necessary to ensure fair and simultaneous access to all market participants. This, SEBI said, compromises market integrity and creates an unfair informational advantage.
The probe concluded that BSE had failed to meet the regulatory requirement mandating exchanges to provide transparent and equitable access to all users.
In addition, SEBI noted that BSE had not implemented a Really Simple Syndication (RSS) feed to distribute corporate disclosures—an omission that further heightened the risk of unequal access to sensitive information.
Serious deficiencies were also observed in how BSE monitored client code modifications, which are only permitted in the event of genuine errors. The exchange reportedly failed to take disciplinary action against brokers with frequent modifications and did not effectively monitor ‘error accounts’—raising red flags over potential misuse and insufficient due diligence in trades between unrelated institutional clients.
Rather than conducting independent audits, BSE was found to rely heavily on broker self-confirmations regarding trades transferred to error accounts, with some brokers not even subject to annual inspections.
“As a first-level regulator, BSE must maintain internal controls to manage and disclose corporate announcements in compliance with its obligations,” SEBI said in its order. “Information should be equally, transparently, and fairly accessible to all.”
The order further stated: “The availability of information about listed companies to LCM employees and paid subscribers before the general investing public had access through BSE’s website has clearly undermined the principles of impartiality, transparency, and fairness in information dissemination.”
SEBI described BSE’s conduct as marked by “omissions, laxity, and negligence, with a lethargic approach” that is unacceptable for an institution tasked with frontline regulatory responsibilities. It stressed that such behavior cannot be excused, especially when it risks opening the system to exploitation. (Source: IANS)
