The Multi Commodity Exchange (MCX) is conducting an internal inquiry to find out if a 2016 agreement to share data with the Indira Gandhi Institute of Development Research (IGIDR) was misused. This comes after a whistle-blower alleged that data from the MCX was accessed by Ajay Shah, who is also being investigated for the algo trading scam at the National Stock Exchange. The same whistle-blower had revealed the modus operandi in the NSE case, which resulted in an investigation by SEBI and the CBI.
The whistle-blower has claimed that data from the MCX was being accessed by Shah, whose wife Susan Thomas is a researcher and professor at the IGIDR. Both Thomas and Shah came under a cloud in the NSE case, which first came to light in 2015. Hence, sharing of data with the IGIDR and Thomas in September 2016 by the MCX has raised suspicion, the sources said.
When contacted, Mrugank Paranjape, MD and CEO, MCX, declined to comment . Emails sent to MCX, Shah and Thomas did not elicit any response.
Shah was a former consultant to the Union Finance Ministry under the Congress-led UPA government and has been accused of data breach at the NSE. He is alleged to have played a role in manipulating the exchange’s trading systems for preferential access by brokers.
SEBI at work
So far, SEBI has sent a show-cause notice to Shah only for his involvement with the NSE but the regulator is trying to unravel what possibly could have happened at the MCX and how the exchange was sharing data with the IGIDR, sources told BusinessLine .
It has been alleged that a data pipeline between the MCX and the IGIDR was established, and every evening, either around or post market closing, crucial data files flowed to the research organisation. The sources said MCX officials have told SEBI that they were not aware of the algo trading scandal or the preferential access scam at the NSE when they started sharing data with the IGIDR around September 2016.
The MCX has a monopoly in commodity derivatives. The whistle-blower has claimed that the ‘dark fibre’ trading links were operating in a regulatory vacuum even at the commodity exchange apart from the NSE. Algo or the high-frequency trading software, depends heavily on data that could de-construct the order-book of an exchange for devising strategies.
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