With the arrest of former National stock exchange managing director and CEO Chitra Ramkrishna in a co-location scam case on March 6 by the Central Bureau of Investigation (CBI), the focus will now shift on how the whole episode was planned, as the central agency interrogates her.
Here Is Your 10-Point Cheatsheet To This Big Story:
- The spate of regulatory orders and investigative actions against the former management of NSE has only prolonged the uncertainty around NSE’s public offer. Vikram Limaye, the current NSE CEO, has decided against seeking another term when his tenure ends in July.
- While the offer of NSE’s shares to the public has been delayed, the stock exchange has invited applications for the MD and CEO positions, detailing the eligibility criteria, including an IPO experience.
- Ms Ramkrishna has been sent to a seven-day CBI custody for questioning. Former NSE CEO Chitra Ramkrishna accepted accepted that she had been guided by a “Himalayan Yogi” for around 20 years, while taking key decisions during her tenure as the head of the country’s top stock market, was arrested after an almost four year probe by CBI against a Delhi-based stockbroker.
- The CBI’s probe received a shot in the arm after market regulator Securities and Exchange Board of India (SEBI) released a report indicating alleged misuse of power by the top management of NSE and favouring some high-frequency trading brokers.
- What is the NSE co-location scam? NSE started co-location services in August 2009, where due to the close proximity to stock exchange servers, traders got faster access to the price feed like buy or sell quotes distributed by the stock exchange. It has been alleged that some brokers in connivance with insiders, took advantage of the fact that NSE provided data on first come first serve basis for making handsome profits.
- Co-location facilities are dedicated spaces attached with facilities like power supply and bandwidth and can be leased by a third party for trading. The faster access to data helped traders receive quotes earlier than others and execute trade faster, thus resulting in profits for them. Also, since the charge for these services was high, only big brokers could afford to rent such a space.
- A whistleblower in the case alleged that OPG Securities, with help from some officials in NSE’s IT department was able to figure out which server had the least load so that they could get connected to the NSE server faster. The trader had allegedly mapped multiple IPs to a single server to get access to the first two or even three connections to that exchange server and crowd out other members.
- Meanwhile, a Delhi court on Wednesday (March 9) remanded Anand Subramanian, the ex group operating officer of the NSE, to fourteen days judicial custody, in connection with the co-location scam case.
- The CBI official produced him before the court of Sanjeev Aggarwal on Wednesday. The federal probe agency moved a plea before the court saying he wasn’t required for further questioning and requested the court to send him to judicial custody. The court allowed the move of the CBI and remanded Mr Subramanian to fourteen days of judicial custody. He will now be lodged at Tihar Jail.
- Mr Subramanian was arrested by the CBI on February 24.