The CBI probe into the NSE co-location scam has revealed that one of the key accused, OPG Securities Private Ltd, owned by Sanjay Gupta, intentionally logged into the secondary server of the exchange on 670 occasions in five years from 2010, for illegal profiteering.
In a period of five years, said CBI sources, OPG Securities faced connectivity issues on five occasions only and informed the NSE about it. In 2012, NSE reprimanded OPG and directed it to return to the primary exchange server. But the company continued trading through the secondary server.
CBI has relied on multi-agency forensic audits and expert committee reports to dig out irregularities committed by traders in connivance with NSE officials in the co-location scam, in which former CEO Chitra Ramkrishna and Group Operating Officer (GOO) Anand Subramaniam, have been placed behind bars since early this year.
In their separate reports, Deloitte and Ernst and Young (E&Y) have shared precise details of rigging of the co-location architecture that ensured OPG was consistently either first or among the first three members to log on to the servers.
Deloitte conducted a forensic examination of NSE’s futures and options segment, while E&Y audited other segments and the Indian School of Business calculated the illegal gains made by getting first access to secondary server and through sale of software to traders.
According to the agency sources, OPG mapped multiple IPs to a single server such that it would often get the first 2 or 3 connections to that tick-by-tick (TBT) server. In 2014, NSE had switched to the system of dissemination of TBT data for co-located trading members, to overcome latency and enable faster access to the data.
CBI is further probing allegations of connivance of NSE and SEBI officials, which include providing NSE trade data to Ajay Narottam Shah. The data was used to make software “Chanakya” which was sold to brokers like OPG to exploit it financially. Gupta is also alleged to have bribed some SEBI officials to influence the inquiry. Illegal trading by them in Dubai, Ghana, Singapore, Hong Kong and China is also under investigation.