CBI quizzes OPG Security's Sanjay Gupta in NSE co-location case

The Central Bureau of Investigation (CBI) on Friday questioned Sanjay Gupta, the promoter of Delhi-based brokerage OPG Security, for allegedly manipulating the National Stock Exchange's (NSE) colocation system to gain unfair access to trading data.

According to a CBI official, Gupta in conspiracy with NSE officials “abused” the server architecture of the exchange. The probe agency believes that some of the exchange employees have facilitated in providing OPG access to their colocation servers between 2010 and 2012. This helped OPG obtain first access to market data, before other trading members, the official explained.

Early this week, CBI has filed first information report (FIR) against Gupta, his brother-in-law Aman Kokrady and Ajay Shah, a data cruncher cum researcher, along with unknown officials of the NSE and stock market regulator Securities and Exchange Board of India (Sebi). All were booked under Prevention of Corruption Act and Section 66 of Income-tax Act (sending of "offensive messages").

CBI wants to know that how Gupta managed the data centre staff at NSE to obtain connectivity to the backup servers which had zero load and hence, provided faster access to data feed.

The probe agency in the FIR has alleged that Gupta managed to manipulate Sebi inquiry against the role of OPG Security in the misuse of TBT (tick-by-tick) architecture of servers by paying a bribe to the officials of the stock market regulator.

Sources say that CBI may questions Sebi and NSE officials next week.

Further, the central agency is also looking into the unlawful gains made by the OPG and other named in the case. CBI is of view co-location facility offered by the NSE, allows low latency and fast execution to trading members, so a few seconds to a stockbroker in a trade can make a huge difference, the official said.

Meanwhile, the probe agency continued searches in multiple cities including Delhi, Mumbai and Bengaluru.

The agency has also detected the role of Ajay Shah, who was allegedly instrumental in the exploitation of NSE TBT architecture. In this architecture, data was disseminated in a sequential manner whereby a stockbroker who connected first to the server of stock exchange received data packet first.

Sebi has been probing the matter since 2015 after it received at least three complaints which alleged that certain brokers including OPG Securities colluded with the employee and outsourced staff of NSE to obtain information regarding load and starting of the server including the backup server. Sebi is expected to soon come out with its final order in the case.