The controversy over the NSE co-location scam refuses to die down. The Delhi High Court will Tuesday hear a public interest litigation (PIL) related to the over Rs 50,000 crore NSE co-location scam, which shocked the Indian financial system few years back.
The PIL came from a CBI complaint filed in August 2017–which sought apex court’s directions to the Central Bureau of Investigation (CBI) for increasing the ambit and scope of its investigations in the NSE co location scam.
On Tuesday, noted lawyer Mahesh Jethmalani will appear for the petitioner Shantanu Guha Ray, it is learnt.
The petitioner has in the PIL contended that National Stock of Exchange had abused its market position and helped deviant brokers and politicians make unlawful and illegal gains, thereby rendering the institutional set up of exchanges itself at risk. It has also been alleged that SEBI has not taken any action against such brokers from NSE, it’s concerned officers and other culpable persons.
The NSE co-location scam is all about market manipulation at the NSE. It had been alleged that select players obtained market price information, ahead of the rest of the market, enabling deviant brokers to make wrongful gains running into hundreds of crores.
With the alleged connivance of insiders, NSE’s algo trading was rigged and co-location servers were used to ensure substantial profits to a set of brokers.
It may be recalled that NSE Vice Chairman Ravi Narain had put in his papers on June 2, 2017, after regulators intensified their probe into the alleged lapses in high frequency trading. Chitra Ramakrishna, MD & CEO had resigned from the exchange in December 2016.
After receiving show cause notices from SEBI, 12 out of 14 high profile current and former top executives at NSE including Ravi Narain and Chitra Ramakrishna filed an application with SEBI to settle the co-location issue under consent mechanism in July 2017. NSE too had filed a consent application, which was later returned in March 2018 in the wake of CBI investigation gathering momentum.
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