A senior I-T department official had told FE that financial transactions of Subramanian’s wife, Sunitha Anand, a former NSE official, were also being investigated.
The Central Bureau of Investigation (CBI) has collected relevant documents from the Securities and Exchange Board of India (Sebi) as part of its probe into the irregularities at the National Stock Exchange (NSE). The agency also questioned the exchange’s former group operating officer Anand Subramanian in Chennai for the last three days, sources told FE on Monday.
The CBI had questioned former NSE CEO Ravi Narain on Saturday in connection with the alleged abuse of the co-location facility by an NSE stock broker. It had quizzed the exchange’s former CEO Chitra Ramkrishna on Thursday and Friday. The agency had also issued lookout notices against Narain and Subramanian on Friday to prevent them from leaving the country.
The CBI stepped into the case after tax raids on the Mumbai and Chennai residences of Ramakrishna and Subramanian commenced on Thursday morning. A senior I-T department official had told FE that financial transactions of Subramanian’s wife, Sunitha Anand, a former NSE official, were also being investigated.
The CBI is also learnt to be investigating other unnamed NSE officials to gather evidence on allegations that some brokers received preferential access through the co-location facility at the stock exchange. Early login and ‘dark fibre’, which allows a trader a split-second faster access to the data feed of an exchange, could potentially result in big gains for a trader.
The CBI had booked Sanjay Gupta, the owner and promoter of Delhi-based OPG Securities, and others in connection with the alleged abuse of the NSE co-location facility. The agency is also investigating unidentified Sebi officials.
“It was alleged that the owner and promoter of the said private company (OPG Securities) abused the server architecture of NSE in conspiracy with unknown officials of NSE. It was also alleged that unknown officials of NSE, Mumbai, had provided unfair access to the said company using the co-location facility during the period 2010-2012 that enabled it to login first to the exchange server of Stock Exchange that helped to get the data before any other broker in the market,” the CBI has said in its FIR.
It emerged that in 90% of cases, Gupta was the first to log in, which prompted murmurs in the stock broker circuit and resulted in a load balancer being introduced by the NSE. According to the FIR, Gupta again managed through the data centre staff of NSE to get connected to the backup servers, which were with zero load and provided far better and faster access of market feed to OPG Securities in comparison to other brokers.
The probe agency has alleged that he had managed to manipulate Sebi’s inquiry against the role of OPG Securities in the misuse of TBT (tick-by-tick) architecture of servers by bribing officials of the market regulator.
The ambit of the ongoing tax raids includes “suspected generation of black money by way of abuse of co-location facility in the NSE”, an official said.
In an order issued on February 11, the Sebi had said Ramakrishna and Subramanian committed “financial misdeeds”, and identified serious governance lapses and misrepresentation of facts at NSE between 2013 and 2017.
The regulator found that Ramakrishna shared sensitive information pertaining to financials, appraisals, increments and strategy with an unknown person, who is also referred to as “Siddha Purush” by Ramakrishna.
