CBI questions NSE IT's Muralidharan in co-location case, says official

The Central Bureau of Investigation (CBI) on Tuesday questioned N Muralidharan, executive vice chairman of National Stock Exchange NSE IT (NSE IT) on the co-location case, a CBI official said on condition of anonymity. NSE IT is the information technology based subsidiary of the stock exchange focused on banking, insurance, capital market ecosystem and online examinations.

In January, 2020, SEBI had exonerated Muralidharan along with eight others including NSE CEO Ravi Narain in the co-location case where it was alleged that certain stock brokers were permitted to avail of Point to Point dark fibre connectivity from Sampark Infotainment Private Limited that conferred a latency advantage to such brokers which resulted in substantial increase in their turnover.

Muralidharan joined NSE as the chief projects officer on April 1, 2013. He resigned from NSE on April 1, 2015 and was appointed as MD and CEO of NSE IT, which is a separate subsidiary of NSE.

CBI had filed an FIR on the co-location matter on May 28, 2018 which it has opened again due to the fresh irregularities that have surfaced after another SEBI report that said Chitra Ramkrishna, former managing director (MD) and chief executive officer (CEO) of NSE took key decisions at the leading bourse on the advice of an unknown “Himalayan yogi”, whom she had never met and who instructed her to appoint Subramanian as group operating officer.

The four-year-old FIR was primarily against Sanjay Gupta, MD of OPG Securities, and it also named his brother-in-law Aman Kokrady and Ajay Shah, a data specialist and researcher employed by the NSE, along with unknown officials of the NSE and Sebi for their role in the controversy.

Between June 2010 and March 2014, the NSE had deployed the so-called tick-by-tick (TBT) architecture at its colo facility. TBT disseminated data feed sequentially, giving preference to trading members (TM) that had connected first to the colo server.

Taking advantage of the system, OPG Securities frequently obtained first access to the exchange system in connivance with certain NSE staffers. The issue was brought to light by a whistleblower, Ken Fong, who sent three complaint letters to Sebi in January, August and October 2015, following which the regulator initiated multiple investigations and forensic audits into the matter.

In a separate investigation in April 2019, Sebi directed the exchange to disgorge Rs 625 crore, along with an interest of 12 per cent annum since 2014, for lapses at its colo facility that allowed unfair access to certain brokers. Sebi also asked Narain and Ramkrishna -- who were at the helm when the exchange servers were exploited -- to disgorge a fourth of their salary for a said period and also barred them from associating themselves with a listed company or market intermediary for five years.

The market regulator directed OPG Securities, Gupta, and three others to disgorge Rs 15.6 crore -- with an interest of 12 per cent per annum since April 2014 -- that they made “unlawfully”. All of them moved the Securities Appellate Tribunal against the order, where the matter is currently being heard.