Stock Exchange Board of India ( SEBI) has barred the National Stock Exchange(NSE) from raising money from the securities market for six months and imposed a hefty fine of Rs.1,000 cr.,

The decisions of the Securities and Exchange Board of India (SEBI) came after a probe into allegations that the country's largest stock exchange provided high-frequency traders unfair access to its servers located at the bourse for algorithm trading.

NSE has found guilty in the co-location scam. The exchange has been asked to pay a fine of ₹625 crore plus 12 per cent (for five years) interest. The amount, if considered with simple interest, would come to little less than ₹1,000 crore. If it involves a compound interest, the fine could amount to around ₹1,300 crore.

SEBI, the regulator -- announcing its directions via four orders on matters pertaining to co-location, dark fibre and market intermediaries -- has directed the NSE to disgorge Rs 625 crore in ill-gotten gains from giving traders unfair access to the co-location facility. The NSE will have to pay an interest of 12% a year from April 2014 on the ill-gotten gains.

In another order on the use of the so-called dark fibre for communicating messages, the NSE has been told to pay Rs 62.58 crore plus 12% interest from September 2015.

The NSE's total liability may cross Rs 1,000 crore as SEBI found some former top NSE executives guilty of collusion to gave undue advantage to certain favoured brokers.

An NSE spokesperson said, in an email that it is examining the SEBI orders and that it will "take appropriate steps as may be legally advised".

As per SEBI, in the matter pertaining to the co-location facility, SEBI directed the NSE to undertake a systemic audit at frequent intervals following a thorough appraisal of the technological changes it introduces.

Co-location refers to bourses allowing members to set up automated trading systems on their premises to reduce the time required for orders to flow between the exchange and the broker’s trading system. The regulator also said that the NSE needs to reconstitute its Standing Committee on Technology at regular intervals to take stock of technological issues, and frame a clear policy on administering whistleblower complaints.

The issue of co-location and dark fibre, SEBI directed the NSE to conduct an audit of its technical infrastructure by an independent system auditor starting 30 June and every six months thereafter for the next three years.

SEBI also directed the NSE not to introduce any new derivative product for next six months.

The regulator ordered Ravi Narain, former vice chairman and shareholder director on the NSE’s board, to disgorge 25% of salary he drew down from 2010-11 to 2012-13. He has been barred from associated with any listed company or market intermediary for five years.

It also ordered Ramakrishna to disgorge 25% of her salary for 2013-14 and barred her from representing any listed company or market intermediary for five years.

The NSE, Narain and Ramakrishna will be required to pay the said amount within 45 days of the order. Besides, SEBI barred Subramanian Anand from holding any position with a market intermediary or representing any listed company, directly or indirectly, for three years. Anand had left as the NSE’s group operating officer a few months ahead of Ramakrishna's resignation, citing personal reasons.