We are crowd-sourcing investigation on a whistleblower account detailing how NSE’s system has been exploited. Please use the comment section to share your information
High-frequency trading using colocation that give traders advantages by a few milliseconds have come to occupy the centerstage of equity markets all over the world. Such automated trading, which executes pre-programmed instructions, generating thousands to millions of trades every trading day come out of black boxes designed by whiz kids in the secret corners of trading firms. If deployed unfairly, a tiny unfair advantage can translate into crores of rupees of illegal profit.
Moneylife has repeatedly argued that India has no system of monitoring complex automated systems, leave along trading transaction. Consequently, organisations that operate such technology have become a law unto themselves, supervised by nobody. Even when there is a major glitch or a fat finger trade, no report is put into the public domain.
So, if HFT trades are done illegally, they fly below radar and very few people about them. Fortunately, we have in our possession a detailed document that blows the whistle on what’s possibly going on in NSE. The document below was came by snail mail from Singapore and addressed to Mr B K Gupta, DGM Securities and Exchange Board of India (SEBI). It is dated 14th January 2015 with a copy to Sucheta Dalal. It is not clear what SEBI has done with it in all these months.
Moneylife has written to the SEBI Chairman, the chairman of National Stock Exchange, Ravi Narain, and managing director of NSE, Ms. Chitra Ramakrishnan, asking whether they have acted on this document. Our letters and text messages have been met with complete silence. In trying to get to the bottom of this over the last two months, we have shared this document with the exchanges, regulators, government agencies and key traders. We realised that the only people who can throw light on it are actual HFT players who understand how this game is played.
Hence we are putting out this long document to crowd source informed opinion and facts on this. Hopefully, your information will stir the investigative agencies into looking deeper into it. After reading this document, post your facts and information below. You need not use your actual identify. Your data is secure with us. If you want to write with specifics, please write to [email protected]
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