NEW DELHI: In a unique case, CBI has booked unknown officials of
National Stock Exchange, regulatory body
Securities Exchange Board of India, promoter of stock-trading company OPG Securities Pvt Ltd – Sanjay Gupta and an economist and former consultant in the finance ministry - Ajay Narottam Shah for manipulating the software of
NSE to get first access to the markets when they opened getting ahead of other brokers by some seconds, enough to make a difference in the trade.
Gupta, his brother-in-law Aman Kokrady and
Ajay Shah, a data cruncher cum researcher, along with NSE accessed market feed in advance between 2010 and 2014, allowing them to gain in the trading.
About Shah, CBI says, he had collected NSE trade data in 2005-06 under the garb of doing research and was instrumental in the exploitation of NSE TBT architecture.
After filing a case, CBI teams conducted raids at multiple locations in Delhi, Mumbai and Bangalore.
“It is alleged that Sanjay Gupta abused the server architecture of NSE in criminal conspiracy with unknown officials of NSE. The officials provided unfair access to OPG Securities using the Co-location facility (wherein the broker’s computer is located in the same area in which server of stock exchange is located) during the period 2010-14 that enabled to login first to the exchange server of the stock exchange that helped to get the data before any other broker in the market," the FIR said.
“Even a split second faster access is considered to result in huge gains for any stock trader,” says CBI.
The Co-location offered by the NSE facilitates low latency and fast execution to trading members, it added. Till 2014, information was disseminated by exchange server to the brokers attached with co-location facility through “tick by tick” (TBT) based system architecture, wherein the one who connected with the server first will get all market feed.
It emerged Gupta was the first login in 90 per cent of cases, the officials said which prompted murmurs in the broker (dalal) circuit resulting load balancer being introduced by the NSE. Gupta managed the data centre staff of NSE to get connected to the backup servers which were with zero loads and provided far better and faster access of market feed to OPG Securities in comparison to other brokers, CBI alleged.
When SEBI started an enquiry in the matter, he managed the SEBI officers by paying them bribes and also NSE officials.
“Gupta also directed his employees to delete some important emails, text messages, logs etc related to co-location facility with the intention of destroying electronic evidence against him and the company," the FIR alleged.
After collecting NSE trade data, he passed it on to private persons who in turn developed an algo software named ‘Chanakya’. It was Shah who had sold the software to OPG Securities.
CBI says that Gupta, with the help of his brother-in-law, was illegally trading in Dubai, Ghana, Singapore, Hong Kong and China through his company and they have raised funds from abroad.