UPDATE 1-India's market regulator fines NSE over unfair broker access

* Bars NSE from accessing securities market for 6 months

* NSE didn’t exercise due diligence in installing servers

* No impact of SEBI order on markets functioning - NSE chief (Recasts, adds details)

NEW DELHI/MUMBAI, April 30 (Reuters) - India’s market regulator on Tuesday fined the National Stock Exchange (NSE) over $90 million and barred it from raising money on securities markets for six months after finding it had failed to ensure equal access for all brokers to the exchange’s network servers.

The decision followed a more than three-year investigation by the Securities and Exchange Board of India (SEBI) into allegations that NSE officials had provided some high frequency traders unfair access through co-location servers placed at the site of exchange, which could speed up algorithmic trading.

In one of the largest fines imposed by SEBI, the regulator ordered the NSE to pay within 45 days about 6.25 billion rupees ($90 million) - the profit the NSE made from its co-location operations.

The exchange has also been asked to pay an interest rate of 12 percent a year effective from April 2014 to the Investor Protection and Education Fund.

SEBI said it did not have sufficient evidence that the NSE committed a fraudulent and unfair trade practice but it had established the exchange did not exercise due diligence when putting in place the co-location servers.

"The same created a trading environment in which the information dissemination was asymmetric, which cannot be considered fair and equitable," SEBI said in its 104-page order here.

SEBI’s order will not affect the functioning of the market, NSE chief executive Vikram Limaye told TV channels.

He said the immediate interpretation of SEBI’s order barring the NSE from accessing securities markets was the exchange would not be able to hold an initial public offering for six months.

The NSE had originally planned to go public in 2017 but this was delayed due to an investigation into the co-location operations.

SEBI also asked two former NSE chief executives to pay back a portion of their respective salaries. The executives have also been prohibited from associating with a listed company or a market infrastructure institution or any other market intermediary for a period of five years, it said.

In a separate order here, SEBI prohibited OPG Securities Pvt Ltd and its directors, one of the main beneficiaries of the co-location operations, from accessing the securities market and dealing in securities either directly or indirectly for five years.

“This order sends a strong message that the integrity of the capital markets is paramount. Entering a settlement with NSE would not have sent that signal,” said Shriram Subramanian, founder of InGovern, a proxy advisory firm.

“NSE is in the process of examining SEBI Order passed today and will take appropriate steps as may be legally advised,” an NSE spokesman said.

$1 = 69.6330 Indian rupees Reporting by Nidhi Verma; Editing by Mark Potter