SC Disposes of SEBI's Pleas against NSE after ₹1500 Crore Settlement: Report
Moneylife Digital Team 04 September 2026
The Supreme Court has disposed of pleas by market regulator Securities and Exchange Board of India (SEBI) against National Stock Exchange (NSE) in the co-location and dark fibre cases after the market regulator approved around ₹1,500 crore settlement with the Exchange, says a report from PTI. It comes as NSE, the country’s largest stock exchange, is preparing for its initial public offering (IPO).
 
A bench of Justices JB Pardiwala and K Vinod Chandran took note of the settlement proposed and disposed of the petitions filed by SEBI, the report said.
 
In July, the NSE paid ₹714.74 crore to SEBI after receiving the regulator’s in-principle approval to settle the long-pending co-location and dark fibre cases for ₹1,491.21 crore. The latest payment, together with the ₹776.47 crore already deposited by the NSE, completes the ₹1,491.21-crore settlement amount agreed under the revised settlement terms.
 
NSE had initially filed two settlement applications with SEBI in June 2025, covering the co-location and dark fibre matters for a cumulative amount of ₹1,387.39 crore.
 
Subsequently, on 13 March 2026, it revised the settlement terms, increasing the cumulative settlement amount to ₹1,491.21 crore.
 
In June, the NSE filed its draft papers with SEBI for an IPO comprising an offer for sale (OFS) of 14.89 crore equity shares by existing shareholders, representing nearly 6% of the exchange’s equity capital.
 
NSE, in its draft red herring prospectus (DRHP), provided a comprehensive overview of its ongoing and resolved legal issues, including the prolonged colocation case, where the Exchange had proposed revised settlement terms of ₹1,491.21 crore to SEBI and has already recognised a provision of ₹1,391.21 crore in its FY25-26 accounts.  
 
With no fresh issue component, the proposed IPO is estimated at around ₹30,000 crore, making it one of the largest public issues in the Indian capital markets, PTI said, quoting sources.
 
The Colo case dates to 2015 when Moneylife first published a letter by a whistle-blower going by the name Ken Fong in June 2015. The whistle-blower alleged that NSE officials were selectively allowing a few brokers to reap massive profits through preferential access to its colo servers in the form of early log-in or access to servers with low trading loads. 
 
The Colocation Case: A Decade-long Regulatory Battle 
SEBI’s whole-time member (WTM), in an order dated 30 April 2019, directed NSE to disgorge ₹624.89 crore with interest at 12% per annum from 1 April 2014 until actual payment. The order also included non-monetary and restrictive measures, such as barring NSE from accessing the securities market for six months. However, the WTM found that NSE did not violate the SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations.
 
Separately, in an adjudication order dated 10 February 2021, SEBI’s adjudicating officer (AO) imposed a ₹1 crore penalty on NSE related to the same colocation issues.
 
Regarding the Dark Fibre matter, the WTM order of 30 April 2019 required NSE to deposit ₹62.58 crore with interest at 12% per annum from 11 September 2015, along with additional audit and reporting obligations. Subsequently, SEBI’s AO, in an order dated 28 June 2022, levied a separate ₹7 crore penalty on NSE for Dark Fibre violations. This issue, involving an unauthorized service provider laying fibre on NSE premises, was initially reported exclusively by Moneylife. 
 
The NSE Colo scam has been documented by Moneylife editors Sucheta Dalal and Debashis Basu in their book Absolute Power: Inside Story of the National Stock Exchange’s Amazing Success, Leading to Hubris, Regulatory Capture and Algo Scam, released in June 2021. 
 
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