NSE colocation case: Sebi acquits Ravi Narain, 8 other exchange officials

In the high profile NSEco-location case, regulator Sebi on Thursday exonerated nine current and former officials of the exchange, including ex-MD and CEO Ravi Narain, saying they cannot be held responsible for any misconduct or non-compliance in the so-called 'dark-fibre issue'.
The former officials who have been absolved from the charges are the exchange's senior VP (operations) R Nandakumar, Colo head Jagdish Joshi, chief technology officers (CTOs) N Muralidharan and Ravi Apte.

The current officials of the exchange, who have been exonerated are its chief operating officer (Trading) Mayur Sindhwad, CTO-Projects Sankarson Banerjee, CTO-Operations G Shenoy and VP-Regulations Suprabhat Lala.
The order came after an investigation by the Securities and Exchange Board of India (Sebi) against several former and current NSE employees and stock brokers in the co-location matter.
It was alleged that certain stock brokers were permitted to avail of Point-to-Point (P2P) dark fibre connectivity from Sampark Infotainment Pvt Ltd, a non-empanelled service provider, and the connectivity provided by this company conferred a latency advantage to a few brokers which resulted in substantial increase in their turnover during the period from April-August, 2015.
While granting permission to stock brokers for establishing P2P connectivity from its Colo facility with the help of Sampark, NSE has been alleged to adopt a discriminatory approach towards large number of other stock brokers, by allowing Sampark's services to be availed by only a few selected stock brokers.
It has been alleged that NSE has not acted in a fair and equitable manner while dealing with its members and these nine officials were allegedly employed at top positions of the exchange during the period.
Sebi, in its order, said that none of the nine officials was occupying a post of director and/or key managerial position at the exchange during the relevant period -- April- July 2015.
"Further, the materials available on record also don't indicate even remotely, the role of any of the noticees as an employee of NSEIL (National Stock Exchange of India Ltd) in facilitating Sampark to establish the P2P connectivity at NSEIL," it added.
With regard to the allegations pertaining to the amendment made in the circular of 2009 in an opaque manner and allowing Sampark to continue to provide the services, in spite of fact that it did not possess the requisite department of telecom license to provide the desired telecom services, Sebi said it did not find any evidence worthwhile to proceed against these officials.
"It can't be held that the noticees herein were involved in facilitating Sampark to lay down the Dark fibre line to provide P2P connectivity. There is also no evidence to suggest that noticees had any role in modifying the circular of 2009 in the year 2013. Consequently, they were also not responsible for the non-transparent dissemination of the modification so made in the above mentioned circular of 2009 and therefore, the noticees cannot be held responsible for any misconduct or non-compliance as far as laying of P2P connectivity using dark fibre is concerned," Sebi said.
Consequently, Sebi has disposed of the instant proceedings initiated against these officials by exonerating them from the allegations charged against them.

Bharat Forge gains 3% on reports August US class 8 truck sales rise 6% MoM

Shares of auto-component suppliers like Bharat Forge, GNX Axles, and Ramkrishna Forgings were trading higher on the NSE in the morning deals on Thursday after US data showed increase in North America class 8 truck orders.
Bharat Forge, which is the main supplier of US class 8 trucks in India, rallied up to 3.3 per cent to trade at Rs 394.8 apiece.
The supply of components to truck-makers accounts for nearly 41 per cent of its revenues. Of these, approximately 12 per cent revenue comes from North American truck sales.
Shares of other component suppliers, too, gained in the trade. Ramkrishna Forgings rallied up to 8.2 per cent intra-day to trade at Rs 296.5 apiece, while GNA Axles added 2.5 per cent to trade at Rs 237.8 per share.
The North America class 8 truck orders grew 6.3 per cent sequentially in August to 10,414 units. The order, however, slipped 80 per cent on a year-on-year basis, data provided by FTR, an international freight intelligence unit show.
At 10:40 am, Bharat Forge was trading 3 per cent higher at Rs 393.85, as against a 0.59 per cent rise in benchmark Nifty50. GNA Axles, meanwhile, was trading 0.4 per cent higher, and Ramkrishna Forgings was up 6.88 per cent.

PSU banks gain on government Rs 70,000 crore capital infusion plans

Shares of public sector banks (PSBs) moved higher by up to 4 per cent on the National Stock Exchange (NSE), as the government under Budget 2019 announced that state-owned lenders would get Rs 70,000 crore boost for credit improvement.
Newly-appointed Finance Minister Nirmala Sitharaman, proposed in her maiden budget speech that the public sector lenders would be provided budgetary support of Rs 70,000 crore for recapitalisation. Analysts expected capital infusion in the range of Rs 35,000-40,000 crore.

Shares of State Bank of India (SBI) hit a new high of Rs 373, up 2 per cent on the NSE in the intra-day trade on Friday. Canara Bank, Corporation Bank, Bank of Baroda, Bank of India, Punjab National Bank (PNB) and Union Bank of India were up 1 per cent to 4 per cent in intra-day trade today.
At 01:53 pm, Nifty PSU Bank index, the largest gainer among sectoral indices, was up 1.4 per cent, as compared to a 0.68 per cent decline in the Nifty 50 index. Nifty Bank and Nifty Private Bank indices were up 0.11 per cent and 0.02 per cent, respectively.
The Rs 1 trillion reduction of non-performing assets (NPAs) in banks is a very healthy trend to clean the ill of the banking industry. The additional provision of Rs 70,000 crore to the capital of the public sector banks will also ensure additional restoration of financial confidence, said- NV Raman, Partner/ Indirect Tax, BDO India.

KRBL plunges 20% as ED attaches properties in Embraer defence deal case

Shares of basmati rice exporter, KRBL hit a lower circuit limit of 20 per cent to Rs 253 apiece on the National Stock Exchange (NSE), also its 52-week low on Friday, on report that the Enforcement Directorate (ED) Thursday attached assets worth Rs 15 crore of the company in connection with 2008 Embraer deal case. KRBL is the manufacturer of India Gate Basmati Rice.
The case pertains to payment of alleged commission by Embraer to clinch the $ 208 million deal with India, in which it is suspected that kickbacks were paid, the news agency PTI reported.

The attached assets include a land and rice mill located in Dhuri tehsil of Sangrur district in Punjab and it belongs to the rice company KRBL Ltd, the agency said in a statement, added report. CLICK HERE TO READ FULL REPORT
“KRBL is not involved at all in any money laundering case, though it is correct that on July 4, 2019 ED have attached a portion our land at Dhuri Tehsil Sangrur District of Punjab, valuing about Rs 15 crore without giving any show cause notice to the Company,” KRBL said on clarification on news report.
These lands are located adjacent to the company’s factory and have no impact on working of its plant located at Dhuri tehsil Sangrur district of Punjab, it added.
Gautam Khaitan, Solicitor, was in KRBL board as an Independent non-executive director from July 2007 till April 2013 when on our insistence he resigned from the board after it came to KRBL's knowledge that he was allegedly involved in some illegal activities.
Evidently Khaitan's individual dealings have brought KRBL's name into the alleged illegal activities, the company said, adding KRBL will clear its name as legal process will take its course.
The trading volumes on the counter jumped 16-time with 2.24 million shares on the NSE and BSE on Friday.

SBI hits new high as PSU banks gain; Canara Bank, Bank of India up over 4%

Shares of public sector undertaking (PSU) banks rallied by up to 12 on the National Stock Exchange (NSE) in intra-day trade on Friday after the Reserve Bank of India (RBI) said that bad loans cycle seems to have turned around as bulk of the legacy non-performing assets (NPAs) have already been recognized in the banking books.
Corporation Bank, United Bank of India, Uco Bank, Central Bank of India, Union Bank of India, Bank of India, Canara Bank and Indian Overseas Bank were up in the range of 6 to 8 per cent while Punjab National Bank, Oriental Bank of Commerce, Andhra Bank, Indian Bank, Bank of Baroda and Syndicate Bank gained between 1 and 4 per cent. The State Bank of India (SBI) hit a new high of Rs 365, up 1 per cent on the NSE in intra-day trade.

At 12:31 am, Nifty PSU Bank index, the largest gainer among sectoral indices, was up 2.3 per cent, as compared to a 0.22 per cent decline in the benchmark Nifty 50 index. Nifty Bank and Nifty Private Bank indices were down 0.30 per cent and 0.60 per cent, respectively.
According to RBI's bi-annual financial stability report (FSR) released on Thursday, after market hours, banks are showing improvement in stability with the bulk of the legacy NPAs already recognised, and the NPA cycle “seems to have turned around”.
In a baseline scenario, the FSR expects the banking sector’s gross NPA ratio to decline from 9.3 per cent in March 2019 to 9.0 per cent in March 2020. The number of banks having gross NPA ratio of more than 20 per cent came down in March 2019, compared to September 2018.
This implied a broader improvement in asset quality. While banks’ asset quality improved, balance sheet liquidity, which is proportion of liquid assets and stable liabilities, as also profitability need improvement, the FSR said. CLICK HERE TO READ FULL REPORT
“We see that the commentary has turned positive on RBI’s outlook on baseline near term gross NPL in the past two publications after being negative since FY2016. RBI’s internal baseline NPL projection is at 9 per cent for FY2020 (30bps improvement yoy) though we believe that the performance could be far better than this forecast,” analysts at Kotak Securities said in a note.
COMPANY LATEST PREV CLOSE GAIN(%)
UNION BANK (I) 83.05 77.60 7.02
CORPORATION BANK 25.45 23.80 6.93
UNITED BANK (I) 10.70 10.05 6.47
CENTRAL BANK 21.30 20.05 6.23
UCO BANK 18.65 17.75 5.07
I O B 12.25 11.70 4.70
BANK OF INDIA 92.20 88.40 4.30
CANARA BANK 290.00 278.50 4.13
PUNJAB NATL.BANK 80.90 78.00 3.72
PUN. & SIND BANK 26.95 26.25 2.67
BANK OF MAHA 16.00 15.60 2.56
ANDHRA BANK 23.85 23.35 2.14
BANK OF BARODA 123.65 121.40 1.85
ORIENTAL BANK 97.40 95.65 1.83
SYNDICATE BANK 41.85 41.20 1.58
INDIAN BANK 266.25 262.45 1.45
ST BK OF INDIA 363.85 362.15 0.47
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Sebi directs NSE to review data sharing third party pacts since 2009

To safeguard equity investors from another NSE co-location type fiasco, the security market regulator has directed the stock exchange major to review all third party agreement having a data sharing component entered by it from year 2009 onwards.
Accordingly, the NSE has been directed to take necessary legal actions against the parties with whom such agreements were signed "wherever any actions of irregularity, breach of terms and conditions and other provisions of such agreements are observed".

On April 30, the market regulator in a marathon five orders in the matter came down heavily on the NSE.
"Noticee No.1 (NSE) is further directed to submit an action taken report in this regard along with the observation of its Governing Board to SEBI, within three months from date of this order," a Sebi order in the matter of NSE-Corporate Governance.
Regulator further directed the NSE to prepare a detailed documented policy with respect to data usage and data sharing with external entities with due provisions for disclosures of conflict of interest to be made at the level of any employee of NSE.
The direction on disclosures of conflict of interest assumes significance after a massive breach of corporate governance norms was observed in the case in connection to noted public policy academician Ajay Shah for collusion to access confidential market information for business purposes.
Shah and his wife Susan Thomas are credited with co-creating the NSE Nifty50 index. He has had an illustrious stint at various high-level positions, including Ministry of Finance.
However, in what could have been a criminal conspiracy worthy of celluloid screen, Shah along with some of his immediate family members created a virtual family enterprise and used their connections with NSE officials to gain a computing contract for Liquidity Index.
But, the real intent was to use the NSE's confidential data gained from the computing contract to develop algorithmic trading software for sale in the securities market, thereby compromising the integrity of securities market.
In addition, the order read: "The (data usage and sharing) policy shall be comprehensive with proper maker and checker system with provision for a periodic review to ensure prevention of misuse of the data/information".
The misuse of the bourse's co-location facility came to light in 2015 when a whistleblower alleged collusion between a few employees of the stock exchange and brokers.
It was alleged that collusion and lax of oversight allowed a few brokers faster access to market data.A
In one of the orders the regulator directed the NSE to disgorge Rs 624.89 crore in the co-location case and also barred it from accessing the securities market directly or indirectly for a period of six months.

Sebi bars NSE from capital markets for 6 months in co-location scam

The market regulator said on Tuesday the National Stock Exchange (NSE) did not exercise due diligence when putting in place a network that allowed high frequency traders unfair access to some network servers at the exchange.
The Securities and Exchange Board of India (Sebi) barred the NSE from raising money on the securities market directly or indirectly for six months.

Sebi has been investigating allegations that NSE officials provided high frequency traders unfair access through co-location servers placed at the site of exchange, which could speed up algorithmic trading.
It asked two former NSE chief executive officers, Ravi Narain and Chitra Ramkrishna, to "disgorge" 25 per cent of their salaries drawn during a certain period.
Narain and Ramkrishna have been prohibited from "associating with a listed company or a Market Infrastructure Institution or any other market intermediary for a period of five years," Sebi said in a 104-page order.
NSE was asked to pay within 45 days about Rs 624.89 crore with an interest rate of 12 per cent a year effective from April 2014 to the Investor Protection and Education Fund.
(With inputs from PTI and Reuters)

Five of the six IPOs launched this year yielding returns of up to 21%

A majority of the newly-listed companies are trading well above their issue price, giving investors returns of up to 21 per cent this year.
Since the start of 2019, as many as six companies have got listed on the bourses. Of this, five firms are trading above their issue price, fixed after their initial public offerings, as per an analysis of the performance of the new listings showed.

Among the new entrants, Rail Vikas Nigam Limited, which got listed on April 11, has seen the biggest rally in its scrip, which jumped 21.31 per cent from its initial public offer (IPO) price on the NSE.
Wires and cables manufacturer Polycab India, whose scrip debuted on April 16, zoomed 19.94 per cent as compared to its issue price.
The scrip of Chalet Hotels climbed 14.64 per cent and those of Xelpmoc Design and Tech Limited rose by 7.57 per cent against the price at which they had issued shares to investors. Both the companies had made their market debut earlier in February this year.
Xelpmoc Design and Tech Ltd is a provider of professional and technical consulting services, offering technology services and end-to-end technology solutions and support.
Market analysts said that price band of the offers as also the overall trend in market play key role in the success of isssue.
Besides, the scrip of Metropolis Healthcare gained 6.82 per cent from its issue price after getting listed on April 15.
MSTC is the only firm to take a hit in its share price, falling 11.66 per cent since its listing on March 29. MSTC's initial share sale was extended and also its price band was revised.

Meanwhile, Neogen Chemicals, which concluded its initial public offer on Friday, is yet to list its shares on the bourses.
In the broader market, the NSE Nifty has zoomed 8.23 per cent so far this year.

MARKET WRAP: Sensex gains 370 pts, Nifty ends at 11,787; Adani Green up 18%

Benchmark indices ended on a strong note on Tuesday after hitting fresh record highs in the intra-day trade on Tuesday. The S&P BSE Sensex hit a new lifetime high of 39,364.34 in the trade while the broader Nifty50 index of the National Stock Exchange (NSE) surpassed 11,800 level to hit a record of 11,810.95.
At close, the 30-share index Sensex of BSE ended at 39,276, up 370 points or 0.95 per cent while Nifty closed at 11,787, up 97 points or 0.83 per cent.
In the broader market, the S&P BSE MidCap index ended 19 points or 0.12 per cent higher at 15,521, while the S&P BSE SmallCap index closed at 15,172, up 57 points, or 0.37 per cent.
Among sectoral indices, private bank stocks gained the most, followed by financial services and auto stocks.
BUZZING STOCKS
Jet Airways ended around 8 per cent lower at Rs 241.50 apiece on the NSE after reports suggested the airline may shut down its opeartions temporarily.
Tata Consultancy Services (TCS) hit a six-month high, extending its Monday’s 5 per cent rally on the BSE, after the company reported better than expected 2.4 per cent growth in constant currency (CC) revenue in the March 2018 quarter of financial year 2018 - 19 (Q4FY19). The stock settled at Rs 2,132 apiece on BSE, up over 1 per cent.
Polycab India shares made a strong stock market debut by listing at Rs 633, an 18 per cent hike against its issue price of Rs 538 per share on the BSE. The stock ended at Rs 655.00, up 3.48 per cent.

GLOBAL CUES
Asian stocks ticked up on Tuesday, staying near a nine-month high as hopes of stabilization in the Chinese economy helped investors shrug off Wall Street’s underperformance that followed disappointing bank earnings.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.3 per cent, led by gains in China and India. Mainland Chinese shares rose 1.7 per cent, partly on brisk home prices data while Japan’s Nikkei edged up 0.2 per cent.
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Sectoral gainers and losers on NSE
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MARKET AT CLOSE
The S&P BSE Sensex gained 370 points or 0.95 per cent to end at 39,276, while the broader Nifty50 index of the National Stock Exchange (NSE) added 97 points or 0.83 per cent to end at 11,787.
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Cement stocks trade higher
COMPANY LATEST(RS) CHG(RS) CHG(%) VOLUME
INDIA CEMENTS 113.20 1.40 1.25 282366
AMBUJA CEM. 231.10 3.00 1.32 63145
PRISM JOHNSON 101.00 2.80 2.85 59553
ACC 1698.15 23.45 1.40 41125
HEIDELBERG CEM. 179.00 -1.85 -1.02 21869
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Stocks that hit 52-week high on BSE500
COMPANY PRICE(RS) 52 WK HIGH CHG(RS) CHG(%)
ASTRAZENECA PHAR 2290.15 2349.90 26.50 1.17
BAJAJ FINSERV 7592.20 7611.00 82.85 1.10
BATA INDIA 1433.70 1439.20 20.45 1.45
DR LAL PATHLABS 1063.50 1150.00 5.25 0.50
GILLETTE INDIA 7825.00 7906.00 49.45 0.64
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Aviation stocks in focus | SpiceJet, IndiGo near 52-week high after reports suggested Jet Airways might temporarily shut operations
SpiceJet shares surged up to 8 per cent while InterGlobe Aviation, parent of IndiGo, also gained on the expectation of higher yield due to the capacity reduction of Jet Airways.

India’s first private airline Jet Airways is headed towards a total grounding as management, during its board meeting on Tuesday, said that the airline would no longer be able to operate due to paucity of funds. READ MORE
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Nifty Bank index is trading over 1.3% higher
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ALERT :: Market holiday
Stock market will remain closed tomorrow, April 17, on account of Mahavir Jayanti
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ICICI Bank rises over 3% after Goldman Sachs hikes target price on stock
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SpiceJet, Indigo near 52-week highs as Jet Airways stares at shutdown
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NSE red-faced as President Kovind pulls out of silver jubilee celebrations

President Ram Nath Kovind has pulled out of the launch of the silver jubilee celebrations of the National Stock Exchange (NSE) this week after invitations were sent out saying he would be the chief guest.
The invitation for the event at the country’s largest stock exchange was sent by NSE chairman Ashok Chawla and managing director and CEO Vikram Limaye. It had led to some disquiet in official circles as it involved Chawla, who is chargesheeted by the CBI in the Aircel-Maxis bribery case.

The event was scheduled in New Delhi on Wednesday but the President’s press secretary, Ashok Malik, said the President had declined due to his busy schedule.
Malik said he had “no clue” when asked if the President’s decision had anything to do with Chawla’s name on the charge sheet.
“He has regretted…he has a very busy schedule this week and he is also travelling, so he has no time,” Malik told ThePrint.
An NSE official said he had no information about the President pulling out of the event. “We are not sure (about whether or not Kovind will attend), we are yet to get the confirmation,” said the official who spoke on condition of anonymity.
Chawla, who was finance secretary before retiring in 2011, is one of 12 individuals and six firms named in the Aircel-Maxis chargesheet filed last month. The list also includes former finance minister P. Chidambaram and his son Karti.
The CBI, which has been granted two months by the Delhi High Court, can prosecute Chawla only if the Modi government permits it under new provisions of the Prevention of Corruption Act.
Chawla was appointed chairman of the Competition Commission of India by the UPA government in the same year he retired. He joined the NSE board in May 2016 and his term as chairman ends in March 2019.

BSE, NSE create framework to bring stocks under enhanced surveillance

Leading stock exchanges BSE and NSE have put in place a new framework to shortlist and review stocks under enhanced surveillance measures.
Under the new guidelines, public sector enterprises and public sector banks will be excluded from the process of shortlisting of securities under additional surveillance measures (ASM), the exchanges said in separate circulars.

The move comes within a month of markets regulator Sebi initiating a probe into alleged leak of 37 companies being brought under enhanced surveillance before stock exchanges made the list public.
It was alleged that stocks that were to be included in additional surveillance measure were leaked to market operators before the official announcement made by stock exchanges.
As per the circular, it has been decided that ASM parameters along with the thresholds will be disseminated by the stock exchanges.
The decision was taken after a joint surveillance meeting of exchanges and Sebi last week.
The parameters for shortlisting securities under ASM are high low variation; client concentration; number of price band hits; close to close price variation and price-earning (PE) ratio.
The exchanges said these criteria will be applicable for selection of stocks in the ASM framework. These include high low price variation (based on corporate action adjusted prices) of a scrip is 200 per cent or more in last three months and concentration of top 25 clients in the last three months is 30 per cent or more.
Besides, high-low price variation of a stock is 200 per cent or more during last three months and the number of price band hits (upper or lower) in the last three months is at least 30 per cent, then the company will come under enhanced surveillance.
Another criteria would be "close to close price variation in the last 30 trading days is 100 per cent or more and PE negative ... and the concentration of top 25 clients in the last one month is 30 per cent or more".
Further, stock with a close to close price variation in 365 days is greater than 100 per cent and high-low variation of 200 per cent or more during the period, market cap of over Rs 500 crore and has high-low variation in 90 trading days of over 50 per cent, will also come under the enhanced surveillance.
After inclusion in the index, the exchanges said stock filter circuit of 5 per cent will be applicable from the date of inclusion of the stock in ASM, besides, requirement of 100 per cent margin to trade in such stock will become applicable from the next trade date after inclusion in the framework.
After a month, scrips having PE ratio greater than 100 shall be placed in the trade for trade segment. Further, stocks in the ASM framework will be reviewed every two months.
"Scrips having PE Ratio less than 10 (PE ratio is between 0 to 10) shall be moved out of ASM framework and close price shall become the base price for subsequent reviews," exchanges said in similar-worded circulars.
Further, stocks having PE ratio less than 2 times PE ratio of NSE 500 index will continue to remain in ASM, however such scrips will be moved out of trade for trade (restrictive trade) segment.
According to exchanges, public sector enterprises and public sector banks; securities already under graded surveillance measure; stocks on which derivative products are available and scrips already under trade for trade will be excluded from the process of shortlisting under ASM.

NSE-SGX licensing pact to continue beyond August

An arbitrator appointed by the Bombay High Court has directed the National Stock Exchange (NSE) to extend the agreement of Nifty-licensed products to the Singapore Exchange (SGX) until the arbitration concludes. The licensing agreement was to end in August 2018, which could now extend till early 2019.
In an interim order released on Thursday, Justice S J Vazifdar asked the SGX to abide by the high court’s injunction against the launch of new India derivative products. The injunction will remain in effect for four weeks from the date of the final order.

The hearing in the matter is scheduled for November 21. Both parties have been given time to file their claims and counter-claims within specified timelines, said the order.
“The SGX was directed to refrain from offering new India equity derivatives products such as those announced on April 11,” the exchange said in a statement. “Arbitration proceedings are continuing and the hearings on evidence are expected to commence in early 2019. We will provide updates to the market in due course,” it added.
On May 28, the high court had referred the dispute to the arbitrator after the NSE moved the court, seeking an injunction against the SGX. The Indian bourse contested the SGX move to launch new products, scheduled for June 4, alleging that those infringed intellectual property.
NSE-SGX licensing pact to continue beyond August According to the NSE, the new India products of the SGX were identical to Nifty products licensed to the bourse. Counsel for the NSE had also put forth three terms before the court and the SGX for beginning the arbitration proceedings. These terms included withdrawal of the SGX’s April 11 circular on product launch until the arbitration proceedings were over.
The feud between the NSE and the SGX started after Indian exchanges announced the snapping of ties with their overseas counterparts. The SGX responded that it would launch successor products to its flagship Indian equity derivative products on June 4.
Now the NSE and the SGX have been ordered “to facilitate the continued listing of SGX Nifty products for at least two successive contract month maturations beyond the arbitration’s completion date”, the SGX said.
In an attempt to arrest the migration of traders, the BSE, NSE and Metropolitan Stock Exchange had issued a joint statement in February to stop trading of derivative contracts based on Indian indices on overseas bourses.
(With inputs from Reuters)

CBI quizzes OPG Security's Sanjay Gupta in NSE co-location case

The Central Bureau of Investigation (CBI) on Friday questioned Sanjay Gupta, the promoter of Delhi-based brokerage OPG Security, for allegedly manipulating the National Stock Exchange's (NSE) colocation system to gain unfair access to trading data.The Central Bureau of Investigation (CBI) on Friday questioned Sanjay Gupta, the promoter of Delhi-based brokerage OPG Security, for allegedly manipulating the National Stock Exchange's (NSE) colocation system to gain unfair access to trading data.
According to a CBI official, Gupta in conspiracy with NSE officials “abused” the server architecture of the exchange. The probe agency believes that some of the exchange employees have facilitated in providing OPG access to their colocation servers between 2010 and 2012. This helped OPG obtain first access to market data, before other trading members, the official explained.
Early this week, CBI has filed first information report (FIR) against Gupta, his brother-in-law Aman Kokrady and Ajay Shah, a data cruncher cum researcher, along with unknown officials of the NSE and stock market regulator Securities and Exchange Board of India (Sebi). All were booked under Prevention of Corruption Act and Section 66 of Income-tax Act (sending of "offensive messages").
CBI wants to know that how Gupta managed the data centre staff at NSE to obtain connectivity to the backup servers which had zero load and hence, provided faster access to data feed.
The probe agency in the FIR has alleged that Gupta managed to manipulate Sebi inquiry against the role of OPG Security in the misuse of TBT (tick-by-tick) architecture of servers by paying a bribe to the officials of the stock market regulator.
Sources say that CBI may questions Sebi and NSE officials next week.
Further, the central agency is also looking into the unlawful gains made by the OPG and other named in the case. CBI is of view co-location facility offered by the NSE, allows low latency and fast execution to trading members, so a few seconds to a stockbroker in a trade can make a huge difference, the official said.
Meanwhile, the probe agency continued searches in multiple cities including Delhi, Mumbai and Bengaluru.
The agency has also detected the role of Ajay Shah, who was allegedly instrumental in the exploitation of NSE TBT architecture. In this architecture, data was disseminated in a sequential manner whereby a stockbroker who connected first to the server of stock exchange received data packet first.
Sebi has been probing the matter since 2015 after it received at least three complaints which alleged that certain brokers including OPG Securities colluded with the employee and outsourced staff of NSE to obtain information regarding load and starting of the server including the backup server. Sebi is expected to soon come out with its final order in the case.