NSE: Corporate Governance Transgression

This case concerns governance issues faced by a reputed stock exchange in India, the National Stock Exchange (NSE). The failure of governance started from the time of the issuance of co-location licenses in 2010. After a whistle-blower’s letter in 2015 to the regulator, the Securities Exchange Board of India (SEBI), along with a renowned Indian journalist, the scam was uncovered. A forensic audit by Ernst Young confirmed the broker’s preferential licenses given by NSE. The investigation also led to the discovery of other governance issues at the stock exchange, and since then, SEBI dispensed penalties to the accused in February 2022. As of July 2022, SEBI appointed Mr Ashish Chauhan as NSE’s next Chief Executive Officer and Managing Director (CEO and MD). Mr Chauhan was already involved in the formative years of the stock exchange and must think of cleaning up the legacy issues and rebuilding the image of NSE. Management students across various specialisations have a corporate governance and business ethics course. This case can be used to reflect on the independence of the board, the responsibility of the nomination and recruitment committee, stakeholders’ disclosures and the importance of regulatory body intervention at appropriate times.