CBI Made ‘Substantial Progress’ In NSE Co-Location Case Probe, Says FM Sitharaman

New Delhi: Union Finance Minister Nirmala Sitharaman said on Tuesday that the Central Bureau of Investigation (CBI) has made significant progress in the investigation into the National Stock Exchange (NSE) co-location case, in which markets regulator Sebi found violations of norms by the stock exchange and some of its former top level employees.

In the case of NSE co-location, the Centre and Sebi have received certain objections. Sitharaman said in a written response to the Upper House that during the investigation into the problem, it was discovered that certain stock brokers had preferential access to the trading system.

“CBI has also registered a case in the matter in the year 2018 under relevant sections of India Penal Code, 1860, Prevention of Corruption Act, 1988 and Information Technology Act, 2000. The CBI investigation is still going on. CBI has informed that substantial progress has been made in the investigation of the case,” the finance minister further said.

NSE’s former CEOs and top executives have been held liable for breaches of the Securities Contracts (Regulations) (Stock Exchanges and Clearing Corporations) Regulations, 2012, and monetary penalties and other restrictions have been placed on them, according to Sitharaman.

Meanwhile, in the NSE co-location case, a Delhi court on Monday allowed the CBI to acquire the handwriting sample of Chitra Ramkrishna, the former managing director and chief executive officer of the NSE.

Ramakrishna, along with her colleague and Group Operating Officer (GOO) during her term, Anand Subramanian, is currently being held by the CBI.

Following a FIR filed in May 2018, amid further discoveries regarding irregularities at the country’s major stock market, the arrest in the co-location case was made.

Ramkrishna’s judicial custody was further extended by Special Judge Sanjeev Aggarwal until April 11 after she was brought before the court at the end of her previous judicial custody.

Before Chitra Ramakrishna, Ravi Narain was the MD & CEO of the exchange.

In February of this year, the Securities and Exchange Board of India (Sebi) fined NSE, Ramakrishna and Narain, and two other executives for irregularities in senior-level recruitment.

Narian led the NSE from April 1994 to March 2013, while Ramakrishna served as the stock exchange’s MD and CEO from April 2013 to December 2016.

The NSE and its top executives broke the rules by selecting Subramanian as GOO and MD advisor, according to Sebi.

In a separate reply, Minister of State for Finance Pankaj Chaudhry said, “Sebi has carried out thorough examination/investigation of the complaints and has taken suitable actions against various entities/individuals.”

Sebi received some complaints in 2015 alleging certain irregularities in respect of co-location facility provided by NSE, he said.

Sebi has also recommended stock exchanges to implement appropriate surveillance mechanisms using technological technologies. External forensic auditors have also been appointed by Sebi to help the investigative authority, according to Chaudhry.

“In this regard, Sebi and the stock exchanges have surveillance mechanisms in place to track the activities on the stock exchange platform and to generate alerts based on dynamic, system-based parameters,” the minister said.

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