India

Pending probe, NSE sets aside co-location revenue

The market watchdog had directed that pending completion of the probe, revenues from the co-location facility - starting September 2016 - be transferred to a separate bank account.

The National Stock Exchange (NSE) has, so far, set aside over Rs 4,000 crore of revenues from its co-location operations, following directions from the Securities and Exchange Board of India (Sebi), which has been investigating the NSE’s co-location operations for alleged lapses.

Disclosures by the NSE shows that as of June 30, 2020,  Rs 4,066.78 crore (Rs 3,606.73 crore as of March 31) was transferred to a separate bank account, and then has been invested under the board of directors approved investment policy and procedures.

The market watchdog had directed that pending completion of the probe, revenues from the co-location facility - starting September 2016 - be transferred to a separate bank account.

The NSE also pointed out that “it has strong grounds to contest the above orders including monetary liability (including from pending adjudication proceedings) raised by Sebi.

"Accordingly, no provision for any liability in this regard is considered necessary in the financial results as of and for the quarter ended June 30, 2020”.

The orders pertain to those concerning the co-location probe and Dark Fibre matter.

Among the financial disclosures, the exchange reported consolidated profit before tax (PBT) of Rs 922.65 crore in the June quarter, as against Rs 638.78 crore in the corresponding quarter in the financial year 2019-20.

The company’s operating revenues improved 32 per cent on a YoY basis to Rs 1,073.55 crore.

The trading services segment accounted for the bulk of the profits for the stock exchange, garnering Rs 708.53 crore or 96.2 per cent of the combined profits of various business segments.

Among the services part of the standalone operations, listing fees was up by little over 4 per cent on a YoY basis, to Rs 23 crore in the June quarter.

Investment bankers say this can be attributed to the slowdown in primary issuances or initial public offerings in light of Covid-19.

The treasury income grew 48 per cent to Rs 163 crore in Q1.

The NSE is also working on its IPO and is working towards getting the final go-ahead from Sebi.

Photograph: Francis Mascarenhas/Reuters

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