NSE co-location case: Sebi, NSE officials under CBI lens

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Onto the latest in NSE co-location case. Yesterday the Central Bureau of Investigation filed an FIR in the matter. The CBI has booked unknown officials of the Securities and Exchange Board of India (Sebi) and the National Stock Exchange for taking bribes and manipulating the NSE trade systems to give unfair trading access to OPG Securities.

As per the FIR in the NSE co-location case, there are three important elements in the FIR. First is the alleged role of Sebi officials. The FIR alleges that Sanjay Gupta influenced the official of Sebi for which bribe money was given to some unknown officials, to get a favorable report in ongoing probe. Sanjay Gupta also directed his employees delete important mails, text messages’ logs, etc., related to co-location controversy.

One more name in the FIR is Ajay Shah. The FIR alleges that Ajay Shah had been instrumental in exploitation of NSE TBT architecture. He collected NSE trade data in the name of research and passed it to develop an algo software named ‘chanakya”. Through which the brokers were benefitted by exploiting the TBT architecture of NSE.

Lastly unknown officials of NSE gave OPG Securities private limited access to servers which were technologically latest and least crowded at that particular period. He also managed the data centre staff of NSE to allow OPG to use the backup servers. Backup servers were with zero load and therefore had provided far better and fast access to the market feed.

NSE till this point of time has nor denied or accepted any role of wrongdoing by the employees in this case, but the CBI FIR claiming a clear connivance of NSE does put the company in a dock.

More importantly, with Sebi’s probe still ongoing in the co-location matter and the FIR now raising questions on officials of Sebi with charges of taking bribe. This will question the authenticity of the report, until Sebi either explains its stand or makes some changes in the investigation committee.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow