NSE, former chief Vikram Limaye, others settle TAP system case with Sebi. pay Rs 643 crore | NSE, former managing director and others resolved TAP case: Will pay ₹643 crore to SEBI for this, market regulator sent notice in February 2023

National Stock Exchange (NSE), former managing director and CEO of the exchange Vikram Limaye and 8 others have reached an agreement in the case of misuse of Trading Access Point (TAP). NSE and these people will pay Rs 643 crore to the market regulator Securities Exchange Board of India to settle this matter.

This is one of the largest settlement amounts so far. The case has been resolved by agreement without accepting or rejecting findings of fact and law. This settlement has cleared the way for NSE's IPO, which has been awaited for a long time.

Due to this dispute, the initial public offer of the exchange was getting delayed. Apart from NSE and Limaye, those who settled the matter include Umesh Jain GM. Shenoy, Narayan Neelakantan, V.R. Narasimhan, Kamla K, Nilesh Tinekar, R Nandakumar and Mayur Sindhwad.

SEBI in February 2023 had sent notice

This matter came to light in February 2023 when SEBI issued a show cause notice to NSE. In that notice, it was said that many brokers have taken advantage of TAP by creating irregularities in the system and NSE has failed to take adequate steps to stop it. Trading members registered with NSE connect to TAP to establish communication with the NSE trading system.

TAP was started in 2008

TAP was an application that NSE placed between the front-end and the host end so that all the communication between the front-end and the host-end happens through this TAP application. That means, orders to buy and sell shares are placed through this software. This software was launched in 2008.

A new service called Direct Connect was introduced in 2016

NSE started TPA to monitor the number of orders sent by brokers to the stock exchange so that it can recover transaction fees from them. TPA used to send orders to the stock exchange from multiple servers. Meanwhile, a complaint filed with SEBI in 2013 alleged that high frequency traders manipulate the TEP software and place orders without paying transaction fees.

SEBI continued to investigate the matter and in 2016, a new service called Direct Connect was introduced as an alternative to TAP. The use of Direct Connect for businesses in the equity segment continued till September 2019. The misuse of TAP came to light in 2017 when SEBI started probing the colocation scam involving then NSE chiefs Chitra Ramakrishna and Ravi Narayan.