NSE co-location case: Multi-agency probe by CBI, ED and Income Tax to look into the money trail, illicit gains and finding the kingpins

GOI needs to move quickly and evaluate the criminality of NSE and its zealous destruction of data

GOI needs to move quickly and evaluate the criminality of NSE and its zealous destruction of data
GOI needs to move quickly and evaluate the criminality of NSE and its zealous destruction of data

Will NSE finally face up to reality and admit to its errors and ways?

The government is planning to probe a high-level coordinated multi-agency probe into the National Stock Exchange’s co-location scam looking into the actual players, money laundering, and manipulations in the Indian stock exchanges. The move came after the controversial former Managing Director Chitra Ramakrishnan’s dubious activities came out in recent Securities Exchange Board of India (SEBI) findings. The multi-probe agency comprises of Central Bureau of Investigation (CBI), Enforcement Directorate (ED), and Income Tax sleuths.

After Chitra Ramakrishna’s fake claims of depending on her secret mentor – a Himalayan Yogi for the past 20 years through emails – for taking crucial decisions has made demands for a thorough interrogation by the agencies handling criminal activities and probing in money trails.[1]

The news agency PTI reported that – as a multi-agency probe into the NSE case gathers pace, the grant of preferential server and data access to select brokers and their suspected misuse are being investigated threadbare to unveil all quid pro quo arrangements in a highly-sophisticated scheme that worked like a cricket betting scandal, officials said on Monday.

While the bourse has said it has taken several steps over the years to strengthen its technology infrastructure, including as per regulatory orders, the officials said certain fresh disclosures call for a detailed probe into whether a select group of individuals in high positions had banded together to make illicit gains by facilitating the preferential trading slots, beginning over a decade ago.

Even a split-second faster access is said to result in huge gains for a trader. The preferential access allegedly did not include just close proximity to the exchange servers but also provided faster and ‘Tick-By-Tick‘ (TBT) data containing minute details about all trades and orders. “The difference may be very small for one individual investor, possibly just one rupee or a few paise per share, but when you look at the huge amount of trades running into lakhs and crores every day, the overall gains for the selected brokers could have run into hundreds and thousands of crores of rupees over a period of few years,” said senior officials detailing the co-location scam.

NSE’s co-location facility allowed brokers to take on rent-specific racks to co-locate their serves and systems within the exchange premises for a low latency connection to the exchange. The servers and systems placed in these racks got to receive live market data feed and accordingly place their trade orders with access to features like direct market access, algo trading, and smart order routing.

The ongoing probes are focusing on illicit gains made in the process and whether a ‘money-making machine‘ was at play in hands of a coterie of people, the officials said.

PGurus reported several series of articles on the co-location scam, started during former Finance Minister P Chidambaram, who always gave his backing to the NSE’s controversial Managing Directors Ravi Narain and Chitra Ramakrishna.

[with PTI inputs]


[1] Income Tax Dept conducts search operation at ex-NSE CEO Chitra Ramakrishna’s residenceFeb 17, 2022, PGurus Newsdesk

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  1. Wonder what are the chances of the real criminals getting caught? Hope it is not another show like many of the previous ones, without reaching a conclusion!


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