“The searches are being conducted at the premises associated with some stock brokers who manipulated thefacility provided by the NSE in connivance with its officials,” a CBI officer said.
The agency had last month filed a chargesheet against, former CEO and MD of National Stock Exchange (NSE), and former NSE COO Anand Subramanian in connection with its case.
The CBI had arrested Subramanian and Ramkrishna in February and March, respectively. The agency registered the case in 2018 but action against the two followed a report of the Securities and Exchange Board of India (SEBI), which indicted Ramkrishna for illegal appointment of Subramanian and for allegedly sharing confidential information
On February 11,for allegedly violating rules in the appointment of Subramanian. According to SEBI, several key decisions taken by Ramkrishna during her tenure as NSE’s MD and CEO from 2013 to 2016, including Subramanian’s appointment, were guided by an unidentified yogi, “who may be largely dwelling in the Himalayan Ranges”.
Investigating agencies have not yet established the yogi’s real identity, although an Ernst and Young audit report indicated that he may allegedly be Subramanian himself.
The CBI’s case pertains to charges of brokers being given preferential access to NSE’s trading system in the form of a co-location facility, through which they bought “rack space” for their servers. According to the agency, these traders obtained faster access to NSE’s data feed.
The CBI has booked Sanjay Gupta, owner and promoter of Delhi-based OPG Securities Pvt Ltd, and others in the case.
Between 2010 and 2014, CBI believes, Gupta allegedly “abused” the NSE server architecture in a criminal conspiracy with officials from the Exchange. Thestates: “…unknown officials of NSE gave OPG Securities Pvt Ltd access to servers which were technologically latest and least crowded at that particular period. This helped OPG Securities Pvt Ltd. in being mostly the first one to log in on the exchange server of the NSE.”
Allegations of unfair access were first made by a whistleblower in January 2015. The whistleblower wrote to SEBI, alleging that a few brokers were able to log into the NSE system with better hardware specifications while engaging in algorithmic trading, to their unfair advantage.
Algorithmic trading, or “algo” in market parlance refers to orders generated at superfast speed by the use of advanced mathematical models that involve automated execution of trade.
A technical advisory committee report by SEBI later found OPG Securities had consistently logged in first on selected TBT (tick-by-tick) servers on most trading days in 2010-14, and also had access to servers that had better hardware. At this point, Gupta is alleged to have bribed SEBI officials for a favourable order in its inquiry.