NSE Co-location Scam: FM Sitharaman assures 'CBI has made substantial progress in case'

A day after the Central Bureau of Investigation (CBI) received permission from a special court in Delhi to collect handwriting samples of former NSE Managing director and Chief Executive Officer Chitra Ramakrishna in connection with the National Stock Exchange (NSE) co-location scam, Finance Minister Nirmala Sitharaman on Tuesday responded on the case in the Rajya Sabha, briefing on the information received regarding the scam so far. 

In her reply in Rajya Sabha, the Finance Minister said, "The Government and SEBI had received some complaints in the matter of NSE co-location. During investigation in the matter, it was noticed that certain stock brokers got preferential access to the trading system. For lapses in this regard, NSE, NSE’s former CEOs and top officials have been held responsible."

"Monetary penalty and other restrictions have been imposed on them. CBI has also registered a case in the matter in the year 2018 under relevant sections of Indian Penal Code, 1860, Prevention of Corruption Act, 1988 and of Information Technology Act, 2000. CBI investigation is still going on. CBI has informed that substantial progress has been made in the investigation of the case," FM Sitharaman added. 

NSE co-location scam

The CBI is currently investigating the inappropriate dissemination of information from computer servers to stockbrokers. In the co-location facility offered by the NSE, brokers could place their servers within the stock exchange premises providing them faster access to the markets. Some brokers in connivance with insiders allegedly manipulated the algorithm and the co-location facility to make profits. 

On March 24, a Delhi court had rejected the bail application of former group operating officer (GOO) of the NSE, Anand Subramanian. He was arrested by the CBI on February 24 and was remanded to custodial interrogation. He was then sent to 14-day judicial custody on March 9. On the other hand, on March 14, the judicial custody of Chitra Ramkrishna, former MD and CEO of the NSE was extended till March 28. She was arrested on March 6. 

On February 17, the Income Tax department had raided ex-NSE MD Chitra Ramkrishna and  Anand Subramanian, after the SEBI report had revealed that she had been guided by a mysterious spiritual guru for the last 20 years in key decisions on NSE. The SEBI had penalised the NSE, Chitra Ramkrishna and Ravi Narayan and two other officials for lapses in hiring at the senior level. Ravi Narain was the Managing Director and Chief Executive Officer of the NSE from April 1994 to March 2013, while Ramkrishna was MD and CEO of the NSE from April 2013 to December 2016. The market regulatory observed that the NSE and its top executives violated securities contract norms relating to the appointment of Subramaniam as group operating officer and advisor to the managing director.

Image: PTI, ANI