The Central Bureau of Investigation (CBI) has expedited the probe in the National Stock Exchange co-location case. It is believed to have scoured NSE premises last week to recover data of brokers involved in the case and later, the Securities and Exchange Board of India (SEBI) as part of the investigation.
A source close to the investigation told Moneycontrol, “CBI spent a couple of days at NSE last week investigating and capturing brokers’ data related with co-location case.”
“The CBI also visited SEBI to understand the co-location data they got from NSE and some past data that the SEBI had collected earlier during their investigation,” another source said.
While some believe the CBI is keen to conclude the case soon after a thorough investigation, an official from the affected party said, this is just a routine followed in any investigation.
The CBI had registered the first information report (FIR) in the case on May 30, 2018.
CBI had filed an FIR against OPG Securities’ promoter Sanjay Gupta, his brother-in-law Aman Kakrady, Ajay Shah (alleged to have facilitated Gupta by developing and providing Algo software Chanakya), and some other unnamed officials of NSE and SEBI.
However, in its reply to a PIL filed by Shantanu Guha Ray at Delhi High Court in May this year, CBI stated the agency is not restricting its investigation only to the FIR. The visit to NSE is believed to be part of this extension of the investigation.
In its 202-page order in April, SEBI had passed directions against 16 entities, including the NSE, for allegedly violating fair access norms and policies for authorized vendors of dark fibre.
As per the SEBI order, NSE shall disgorge Rs 624.89 crores with 12 percent interest earn from co-location from April 01, 2014 onwards to the Investor Protection and Education Fund (IPEF) within 45 days. NSE moved to court seeking permission to provide bank guarantee instead of the money, but the plea was rejected.
Following whistleblower complaints against NSE co-location for giving preferential access to selected brokers, SEBI in July 2016, directed the company to carry out an investigation, including forensic examination by an independent external agency, on its co-location facility.
Meanwhile, SEBI had directed that revenues from co-location facility — including the transaction charges on the trades — be kept in an escrow account.
The accused in the case are being probed for rigging the system in order to provide preferential access to some brokers by giving them access to the backup servers in the co-location facility as well.
With the illegal speed advantage, the brokers under suspicion allegedly carried out high-frequency trades for four years between 2010 and 2014, enriching themselves and their clients to the tune of thousands of crores.