Mumbai: OPG Securities Ltd has claimed innocence in the National Stock Exchange of India Ltd (NSE) preferential access scandal, citing a report that said its trading strategy had nothing to do with exchange systems.

The brokerage was one of the first to be show-caused in the case, in which some broking companies are suspected to have made undue gains by using NSE’s co-location service for high-speed algorithmic trading.

The Securities and Exchange Board of India (Sebi) has so far issued show cause notices to OPG, its associate GKN Securities and Way2Wealth Brokers Pvt. Ltd.

The report, commissioned by Accel Trading and conducted by Indian Institute of Technology Madras professor Ramakrishna Pasumarthy, counters the findings of eight separate investigations into the scandal that the markets regulator has conducted over the last three years. The report claims that far from benefitting from preferential access, OPG did not even enjoy any such access. Mint has seen a copy of the report, which analyses OPG’s trade data from 2010 to 2015. 

“The report was submitted to the regulator in December, which is countering whether OPG or any other brokerage was the first to log in, or it made any material gains on account of logging in NSE servers first," said a person with direct knowledge of the matter. 

A spokesperson for OPG said, “We have made our submission to the quasi-judicial authority and we have nothing more to say in this matter".

According to Sebi’s show cause notice to the brokerage in July, the Delhi-based firm allegedly earned 25 crore due to the preferential access.

The securities watchdog has not issued any order yet in its three-year-long investigation. A consent plea by NSE to settle the matter without admission of guilt is also pending with the markets regulator. The pending resolution of the matter has delayed NSE’s much awaited 10,000-crore public offer. 

Neither EY India Ltd nor Deloitte Touche Tohmatsu India Llp, which conducted forensic audit, linked receiving data early to any unfair advantage.

Mint has reviewed excerpts of these reports. This connection, however, was established by Sebi in its own analysis and by International School of Business (ISB) in the study commissioned by NSE. 

The EY report said orders and trades depend on many factors and it was inaccurate to comment on any material gains due to the alleged information advantage.

The Accel report, which analysed OPG’s trade data, uses these discrepancies to say the audits have failed to establish ‘information advantage’.

“OPG’s trading success was agnostic to the data dissemination methodology (Multicast vs TCP) and that OPG’s market share, trading volume and trade count increased exponentially after introduction of MTBT," the report said. 

Before 2014, NSE disseminated market data through the TCP/IP model—sequential information dissemination; later, it introduced the IP multicast model which broadcasts information at the same time to all members. 

“The report submitted by OPG in its defence in personal hearings at Sebi also claimed that eight investigations differed on whether first log-in meant getting the information (market data) first," said the person cited above.