ED searches multiple locations in Delhi and Gurugram in connection with NSE co-location scam case

The Enforcement Directorate (ED) on Friday carried out searches at multiple locations in Delhi and Gurugram in connection with the National Stock Exchange (NSE) co-location scam case. The agency sources confirmed that at least four premises of brokers were searched.

Co-location is a set-up wherein the broker's computer is located in the same area as the server of the Stock Exchange. This particular set up of servers gives a speed advantage to the brokers availing the co-location facility in comparison to other brokers. Till 2014, information was disseminated by exchange server to the brokers attached with co-location facility through TBT based system architecture. In this architecture, data was disseminated in a sequential manner whereby stockbrokers who connected to servers with lesser load would gain an unfair advantage.

"Some of the brokers who are suspected to have benefited from the co-location scam are under scanner," said an ED official.

On May 28, 2018, the Central Bureau of Investigation (CBI) had registered a case of criminal conspiracy, attempt to give and receive a bribe, misuse of official position and destroying evidence against the owner and promoter of a New Delhi-based private company, unknown officials of the SEBI and the NSE, Mumbai and other unknown persons. Following this, the ED had launched a money-laundering investigation into the case.

According to the CBI, it was alleged that the owner and promoter of the said private company abused the server architecture of the NSE in conspiracy with unknown officials of the NSE. It was also alleged that unknown officials of the NSE, Mumbai, had provided unfair access to the said company using the co-location facility during the period 2010-2014 that enabled it to log in first to the exchange server of the stock exchange, helping it get the data before any other broker in the market.

The CBI had earlier arrested former CEO and MD at the NSE Chitra Ramkrishna and her advisor and former Group Operating Officer (GOO) Anand Subramanian in the co-location case.

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