Top NSE Officials ‘Facilitated’ Co-Location Fraud, Says SEBI Show-Cause Notice

In a two-part final show-cause notice, SEBI named three fraudulent brokerages


The market regulator has alleged that top-ranking executives of the National Stock Exchange of India Ltd., Ravi Narain, Chitra Ramakrishna and Subramanian Anand, “facilitated fraud and manipulation” by failing to take preventive and curative measures against brokerages gaining preferential access to the bourse’s servers.

The Securities and Exchange board of India, in a two-part final show-cause notice, named three brokerages. And it alleged “active connivance of NSE officials”. The notices offer a summary of the regulator’s three-year-long probe into allegations that some broking firms gained preferential access to the NSE’s high-speed algorithmic trading platform through its co-location service.

The three brokerages named are OPG Securities Ltd., Way2Wealth Brokers Pvt. Ltd. and GKN Securities Ltd. They allegedly had a latency advantage (lower time for data to travel) over other NSE members which resulted in monetary gains for them, according to copies of the notices reviewed by Bloomberg Quint.

An email sent to the SEBI spokesperson for further comment went unanswered.

Also Read: NSE Earns Over A Third Of Revenue From Co-Location Service Amid Probe The Allegations SEBI has charged Narain, Ramakrishna, Anand, Ravi Varanasi and Ravi Apte, among others, with fraud, violation of the SEBI Act and Securities Contract and Regulations Act, according to the notices.

Narain and Ramakrishna are former managing director and chief executive officers, Anand the former group operating officer and Apte the former technology head. Varanasi is the current head of business development at the exchange.

To be sure, the show-cause notices don’t discuss any direct collusion or facilitation of illegal access by these NSE officials. But they point out that the NSE didn’t have a fair and equitable access policy, as admitted by Narain and Ramakrishna in their hearings with SEBI and documented in the notices.

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