[BREAKING] SEBI slaps BSE with Rs. 25L Fine following Early Access Data Sharing

The heart of SEBI’s findings lies in the unequal dissemination of corporate announcement data. During the inspection period, BSE’s system architecture allowed its Listing Compliance Monitoring (LCM) team and premium data clients to receive sensitive information—classified as Unpublished Price Sensitive Information (UPSI)—before it was made publicly available on the exchange's website.

Notably, SEBI has fined NSE multiple times before, including the landmark 2019 co‑location penalty and subsequent fines in 2021–22. NSE has recently extended a 1,400 Crore Rupee offer to SEBI in order to settle co-location and dark fibre cases However, this is the first time that SEBI has laid a strict hand on the operations of BSE, the oldest stock exchange in India.

According to SEBI, the differential access was due to technical flaws in the BSE's data handling system. Specifically, the architecture permitted push-based access to paid subscribers, while general investors had to manually retrieve information via a pull mechanism from the website, which relied on load-balancing across multiple databases. In some instances, paid clients accessed information fractions of a second earlier than the public—an edge SEBI deemed potentially damaging to market fairness and transparency.

“The architecture used by BSE compromised the principle of equal, unrestricted, and fair access to market data, thereby violating Regulation 39(3) of the SECC Regulations,” the SEBI order stated.

SEBI also pointed out additional failures on BSE’s part, including inadequate policies regarding frequent client code modifications, insufficient review of brokers’ error accounts, and lax oversight of institutional trade modifications—all of which contravene various SEBI circulars and guidelines.

In its defense, BSE argued that any lapses were technical in nature, non-systemic, and without market impact. The exchange also asserted that no investors were harmed and no improper gains were made. It cited its full cooperation during the probe and pointed out that corrective measures—such as the implementation of a time delay for data feed to premium clients—were put in place immediately after SEBI’s observations.

BSE’s legal counsel further contended that the penalties were based on vague assumptions and speculative “possibilities” of unfair access rather than concrete evidence of wrongdoing. They maintained that SEBI’s internal Enforcement Manual encourages administrative remedies rather than penalties for first-time technical violations.

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