NSE 'dark fibre' case: Sebi exonerates Ravi Narain

In May 2019, Sebi had penalised the NSE as well as two of its former heads - Narain and Chitra Ramkrishna - for allowing Sampark to provide the dark fibre connectivity to stock brokers, despite not having the authorised licence.

Dark fibre refers to an unused optical fibre used for high-speed connectivity.

The Securities and Exchange Board of India (Sebi) on Thursday exonerated nine current and former officials of the National Stock Exchange (NSE), including former chief Ravi Narain, in the so-called ‘dark fibre’ controversy at the exchange, which allegedly provided unfair advantage to certain brokers.

The capital markets regulator stated that it didn’t “find any evidence or any material that establishes or even remotely indicates any role played by any of the noticees, as far as establishment of P2P connectivity by ‘Sampark’ is concerned”.

In May 2019, Sebi had penalised the NSE as well as two of its former heads - Narain and Chitra Ramkrishna - for allowing Sampark to provide the dark fibre connectivity to stock brokers, despite not having the authorised licence.

Dark fibre refers to an unused optical fibre used for high-speed connectivity.

Some of the officials absolved from the charges include vice-president (operations) R Nandakumar, Colo head Jagdish Joshi, chief technology officers (CTOs) N Muralidharan and Ravi Apte.

Current exectuives of the exchange to have been exonerated are chief operating officer (Trading) Mayur Sindhwad, CTO (Projects) Sankarson Banerjee, CTO (Operations) G Shenoy, as well as V-P (Regulations) Suprabhat Lala.

It was alleged that Sampark provided latency advantage to a few brokers, which resulted in a substantial increase in their turnover during the period from April-August 2015.

Sebi, in its order, said that none of the nine officials mentioned occupied a post of director or key managerial posts at the stock exchange between April and July 2015.

It had been alleged that the NSE did not act in a fair and equitable manner while dealing with its members, and added that these officials were allegedly employed at top positions of the exchange during the said period.

On allegations pertaining to the amendment made in the circular of 2009 in an opaque manner to allow Sampark to continue as a service provider, Sebi said it did not find any evidence against these officials.

“It can’t be held that the noticees herein were involved in facilitating ‘Sampark’ to lay down the Dark fibre line to provide P2P connectivity.

"There is also no evidence to suggest that noticees had any role in modifying the circular of 2009 in the year 2013.

"Consequently, they were also not responsible for the non-transparent dissemination of the modification so made in the above mentioned circular of 2009 and therefore, the noticees cannot be held responsible for any misconduct or non-compliance as far as laying of P2P connectivity using the dark fibre is concerned,” Sebi said.

Consequently, the market watchdog has dismissed the instant proceedings initiated against these officials by exonerating them from the allegations charged against them.

Photograph: Danish Siddiqui/Reuters