SEBI Imposes ₹12 Lakh Fine on NSE Data & Analytics for Regulatory Violations

The market regulator Securities and Exchange Board of India (SEBI), has imposed a penalty of ₹12 lakh on NSE Data & Analytics Limited (formerly DotEx International) for multiple regulatory infractions. The decision by SEBI  follows a comprehensive inspection conducted in September 2023 which focused on the company’s operations as a KYC Registration Agency (KRA) during the period from April 2022 to July 2023.

SEBI’s investigation unveiled numerous irregularities, including the company’s failure to maintain an independent disaster recovery and business continuity policy. Until January 2024, NSE Data & Analytics relied on a shared policy with its parent company, NSE, a practice deemed non-compliant with SEBI regulations.

Furthermore, the company was found to have delayed sending acknowledgement letters to investors in 61 cases, exceeding the 10-day limit stipulated by SEBI. Additionally, the regulator identified cybersecurity lapses, noting that vulnerabilities discovered during audits were not addressed within the prescribed timeframe.

The inspection also revealed deficiencies in NSE Data & Analytics’ data centre security practices. The company failed to maintain adequate access logs and did not include clauses related to reporting cyberattacks within six hours, as required by SEBI regulations.

NSE Data & Analytics attempted to justify its actions by citing shared infrastructure with NSE and delays caused by external vendors. However, SEBI rejected these explanations, emphasising that the company is a separate legal entity responsible for its own compliance.

The violations identified by SEBI fall under its Intermediaries and KRA Regulations, and the regulator concluded that NSE Data & Analytics had failed to meet the required standards. The imposed penalty underscores the seriousness of the company’s lapses in cybersecurity, KYC processing, and corporate governance.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.