The money was generated by the National Stock Exchange (NSE) from its co-location facility.
In an order uploaded on its website on Friday, SAT has directed the closure of the escrow account and permitted the NSE to utilise the amount for the business purposes.
However, the tribunal has asked the exchange to deposit Rs 420 crore in an interest bearing account and directed the matter to be listed for further hearing on June 11.
Pending completion of the investigations in the co-location case, the NSE was asked by Sebi to transfer all revenues emanating from co-location facility with effect from September 2016 to a separate bank account.
The NSE co-location facility allows stock brokers to take on rent specific racks and co-locate their servers and systems within the exchange premises.
The primary objective of co-location services of the NSE is to reduce latency for connectivity to the exchange’s trading systems for direct market access (DMA), algo trading and smart order routing (SOR).
In April 2019, markets regulator had directed the NSE to disgorge Rs 625 crore along with 12 per cent interest per annum in connection with the co-location case.
Pursuant to this, the exchange had moved the tribunal challenging Sebi’s rulings against it in the co-location case.
SAT, in an interim order in May 2019, directed the NSE to deposit Rs 625 crore with Sebi, which in turn was directed to keep this amount in an interest bearing account.
Also, the tribunal had directed the exchange to continue with the escrow account that was opened in 2016 in which all the revenue generated from the co-location facilities was required to be deposited.
This order was continued on account of pendency of investigation being conducted by the Sebi.
Darius Khambata, senior counsel for the NSE, submitted that in this escrow account, an amount of over Rs 6,000 crore has now been deposited which the exchange is unable to use it for their business investments.
“…the investigation is now over and, in order to balance the equities, we direct the appellant (NSE) to further transfer a sum of Rs 420 crore to Sebi who in turn, will keep this amount in the same interest bearing account and which would be subject to the result of the appeal,” SAT said in the order.
It further added that the escrow account can be closed by the appellant and the balance amount can be utilised by the appellant for their business purposes.
