Home / News / India /  NSE co-location case: CBI arrests Sanjay Gupta of OPG Securities

The Central Bureau of Investigation (CBI) on Wednesday arrested Sanjay Gupta, managing director of OPG Securities, in connection with the National Stock Exchange (NSE) co-location scam, said an official from the agency on condition of anonymity. Gupta has been remanded to CBI custody for seven days by the CBI special court.

OPG Securities was among the entities that had preferential access to the co-location facility of the NSE. The broker allegedly misused the co-location facility to get unfair advantage over the broader market.

A co-location facility is a service provided by exchanges where brokers and trading members place their servers on exchange premises to get faster access to market data and trading. Co-location of servers is a globally accepted practice, but it is often criticized for disadvantaging traders who do not have access.

The service was launched in NSE in 2009-10 without standard procedures, thus making the systems prone to manipulation.

Recently, the CBI conducted searches in more than 10 locations in connection with the NSE co-location scam to establish if there were financial gains as a result of the unfair access these brokers had. In 2018, CBI registered a case against the company in a scheme involving certain data centre employees, Gupta and a few others who allegedly obtained preferred access to the NSE server data from 2010 to 2014 using an algorithmic trading software. They also obtained quicker data access through the exchange’s secondary server by utilising the co-location facility. In its chargesheet, the CBI alleged that unidentified officials of NSE, Mumbai, had provided unfair access to the company using the co-location facility during 2010-2014 that enabled it to log in to the server of the stock exchange before anyone else, helping it access data before other brokers.

The probe established that OPG Securities, one of the accused mentioned in the FIR, had connected to the secondary server on 670 trading days in the “Futures and Options" segment.

Mint had earlier reported that an Indian School of Business report has shown that nearly 30 brokers, including some well-known algo traders, generated trading profits of 2,582.60 crore between 2010 and 2014. These earnings came from personal trades and those executed on behalf of clients. As many as 17 participants, mentioned in a Deloitte report as allegedly abusing NSE systems to get an early log-in advantage, were the focus of ISB’s investigation.

The Sebi had said that OPG Securities connected to the secondary server almost everyday without valid reasons and ignored NSE’s warning and advisories to gain unfair advantage over other traders.

Priyanka Gawande
Priyanka Gawande is a senior legal correspondent at Mint. She has worked as legal reporter for four years with both television and digital mediums. Based in Mumbai, she reports on disputes across sectors including banking, corporates and finance. This also includes insolvency and bankruptcy cases and intellectual property rights (IPR) litigation. Her focus also comprises tracking capital markets and disputes relating to securities law. Previously, Priyanka worked with Informist Media for 2.5 years covering major insolvency and bankruptcy cases and corporate developments. She started her career in journalism with Business Television India (BTVi) where she reported on primary markets, banking, finance and insurance companies.
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