SEBI Fines BSE ₹2.5 Million For Lapses In Corporate Announcement Handling

The Securities and Exchange Board of India has imposed a penalty of ₹2.5 million on BSE Ltd. for multiple lapses in regulatory compliance, including failing to ensure fair and equal access to corporate filings and deficiencies in monitoring error account trades and client code modifications.

In its order issued Wednesday, SEBI said BSE’s system architecture prior to September 2023 allowed its paid clients and internal compliance team to access corporate announcements before they were made public on the exchange’s website. While the regulator found no specific evidence of insider trading, it concluded that the unequal access breached provisions under the Securities Contracts (Regulation) (Stock Exchange and Clearing Corporations) Regulations, 2018.

The findings stem from a SEBI inspection of the exchange covering the period from February 1, 2021, to September 30, 2022. A show-cause notice was issued to BSE in September 2024.

SEBI also highlighted BSE’s failure to monitor trades in broker error accounts, noting that only after its inspection did the exchange implement daily tracking to ensure liquidation of such trades. The regulator criticised the delayed action as “laxity and lethargic indifference.”

Further, the exchange allowed client code modifications in institutional trades without adequate due diligence or penalty mechanisms to verify the legitimacy of such changes.

SEBI said BSE's omissions and negligence as a front-line regulator created “visible scope for misuse” of its systems and that such failures could not be exonerated.