Co-location case: I-T dept searches premises of top NSE officials

The Income-Tax Department on Thursday raided properties belonging to National Stock Exchange (NSE) officials and a few brokers over the co-location server controversy.

A senior official confirmed the development to Business Standard and said that searches were being carried out by the Delhi I-T department in coordination with a Mumbai team.

Some senior NSE officials are also under the radar. Former NSE MDs Ravi Narain and Chitra Ramkrishna, Suphrabhat Lala are reportedly on the search list.

"The searches are to find out the beneficiaries of the alleged irregularities and to look for the evidence of illegal gratifications received by brokers for the benefit their actions passed on to beneficiaries," the official told BS.

OPG Securities' promoter Sanjay Gupta is at the centre of the co-location controversy. It is learnt that some brokers had availed the server co-location facility and got preferential access to the exchange's trading system.

The brokers could access the price feed faster, giving them an advantage over others. It is also alleged that the breach happened with the connivance of some NSE officials. However, it is not proved yet.

Sources told the business daily that the action has been initiated by the department after getting approval from Union Finance Ministry. Each one named in the show-cause notice (SCN) by market regulator Securities and Exchange Board of India (SEBI) will be probed by the I-T department, sources added.

Earlier in May, the capital market regulator had served SCNs to NSE and 14 of its current and former key management personnel for alleged irregularities at its co-location facility, reported BS. NSE has already sent its response to the SCN issued by SEBI.

On Wednesday, NSE also submitted a forensic audit report on the cash market, currency derivatives, and interest rate in futures markets relating to the ongoing co-location case. The forensic report has been prepared by E&Y and the Indian School of Business, Moneycontrol reported.