Algo Scam: SEBI Asks NSE's 5 Officials, Including Ravi Varanasi, To Stay Out of Action
Market regulator Securities and Exchange Board of India (SEBI) has reportedly asked five top officials from National Stock Exchange (NSE) to 'stay out of action' in the co-location or Algo trading scam. These officials include Ravi Varanasi, NSE's chief of business development, Suprabhat Lala, senior vice-president for regulatory and investor services cell, SRVS Nagendra Kumar, chief business officer for debt, Deviprasad Singh, vice president and head for IT and Mahesh Soparkar, vice president of special projects at the Exchange.
 
Quoting an official from SEBI, a report from Busines Standard, says, “These key management personnel (KMP) have also been directed to recuse themselves from key decisions of the NSE. Further, they have been told not to participate in any of the core activities.” 
 
"People with knowledge of the matter say SEBI’s directive has come after the Central Bureau of Investigation (CBI) intervened and filed a first information report against SEBI officials and others in the colo case. CBI is probing a complaint of abuse of the tick-by-tick architecture of the NSE server. It is alleged that exchange employees may have deleted important mails, texts and logs with the intention of destroying electronic evidence," the report says.
 
SEBI is of the view that there were serious corporate governance lapses at the exchange and the KMP will have to answer for them.
 
Meanwhile, the NSE has filed another consent application with SEBI based on fresh show-cause notices (SCN) served on 4 July 2018. Earlier in March, SEBI returned NSE's consent application citing pending investigations in the algo scam case.
 
While NSE was trying to go for a consent order in its algo or high frequency trading (HFT) or algorithmic (algo) scam to “put the past behind” and launch its initial public offering (IPO), on 3 July 2018, the market regulator issued a second set of show cause notices in its probe into the algo scam.
 
The second set of SCNs alleges that NSE has undergone practices of denial of services to certain stockbrokers resulting in discrimination and non-adherence to principle of fairness and equal opportunity by allowing Way2Wealth (W2W) and GKN Securities to terminate the connections directly in the rack placed inside the exchange’s co-location facility. This, the SCNs says is in complete contradiction to normal practice followed by NSE. 
 
W2W and GKN were allowed to establish P2P connectivity through service provider Sampark, while many stock brokers who desired to lay P2P connectivity through providers other than the four mentioned in the NSE circular on 31 August 2009, were denied permission by NSE staff. It has also been alleged that NSE lacked a clear documented policy for due diligence of service providers by checking their licence while allowing P2P connectivity. 
 
To make matters worse, NSE allowed W2W and GKN to continue to avail Sampark connectivity even after finding out that Sampark did not have the requisite Department of Telecommunications (DoT) license. Furthermore, in the process of providing connectivity, a site inspection was conducted for other stockbrokers such as Millennium, GRD and SMC while the same procedure was not followed for W2W and GKN.
 
The notice further names Chitra Ramakrishna, acting MD and CEO of NSE at the time, as it was her duty and responsibility to create investor confidence in the integrity of the market and also to ensure that the stock exchange abides by all the provisions of SEBI. Subramanian Anand, group operating officer (GOO) & advisor to MD and Ravi Varanasi, Head of business development function have also been asked to reply to the SCN.
 
You may also want to read...
 
 
 
  • Like this story? Get our top stories by email.

    User

    COMMENTS

    jaideep shirali

    12 months ago

    Allowing entities like NSE to file consent applications is a mockery of justice. As it is SEBI is closing the stable door after the horses have bolted. NSE should firstly be made to postpone its IPO till all investigation is complete. When an institution like NSE is as crooked as some of its brokers, the least SEBI can do is clean up the mess conclusively.

    Ravindra Shetye

    1 year ago

    I think this is a fit case for a suo moto investigation by none other than the Supreme Court. I believe in some way this needs to be brought to the notice of Supreme Court.

    NDTV's Prannoy Roy and His Wife Radhika Get SEBI Notice for Insider Trading
    Market regulator Securities and Exchange Board of India (SEBI) has issued a show-cause notice to Dr Prannoy Roy and his wife Radhika, both promoters of New Delhi Television Ltd (NDTV) for alleged insider trading. 
     
    In a regulatory filing, NDTV says, "This to inform you that Dr Prannoy Roy and Ms Radhika Roy, the promoters of NDTV, have informed the Company that on 10 September 2018, they have received a show cause notice (SCN) dated 31 August 2018, issued under Sections 11(1), 11(4) and 113 of the Securities and Exchange Board of India Act, 1992 (SEBI Act) by SEBI, alleging violation, inter—alia, of provisions of Section 12A (d) and (e) of SEBI Act read with Regulation 3(i) and Regulation 4 of SEBI (Prohibition of Insider Trading) Regulations, 1992." 
     
    "The Promoters of NDTV are in the process of seeking legal advice to take appropriate action in the said matter. Since the Company is not a party to the SCN, there will not be any financial implications of the SCN on the Company," NDTV added.
     
    NDTV closed Tuesday 3% down at Rs34.30 on the BSE (Bombay Stock Exchange), while the 30-share Sensex ended the day 1.34% down at 37,413.
  • Like this story? Get our top stories by email.

    User

    COMMENTS

    Sreepathid

    1 year ago

    Drama going on for a long time. the soap opera is going to continue.

    SEBI Backtracks on FPI Rules, To Allow NRIs and PIOs To Hold Non-controlling Stake
    After facing a backlash from foreign funds' lobby group, market regulator Securities and Exchange Board (SEBI) has radically changed its course on banning non-resident Indians (NRIs) and persons of Indian origin (PIOs) from owning foreign portfolio investment (FPI) vehicle or structure. SEBI may allow NRIs and PIOs to hold 25% as a single beneficiary and up to 50% as a group in an FPI. 
     
    In April this year, SEBI had banned NRIs and PIOs from being beneficial owners (BOs) of an FPI, giving them six months to make the changes.
     
    The HR Khan Committee suggestions were made in response to the strong objections raised by the Asset Management Roundtable of Indian (AMRI) to the SEBI circular issued on 10 April 2018 which effectively placed a blanket ban on investments through certain FPIs. 
     
    On Saturday, the Khan Committee recommended some changes in the norms in know-your-customer (KYC) guidelines for NRI and PIOs. The Committee was set up by SEBI to review the FPI rules. The Committee met last week against the backdrop of a sharp fall in market indices. The market was supposedly rattled by the new rules that would be applicable to the FPIs from December, forcing them to liquidate their investments in India. 
     
    Commenting on the interim recommendations of the Khan Committee, Mohit Kapoor, founding partner, Universal Legal, says, “The restrictions imposed on FPI's managed by NRI OCI, RI and PIO's is based on unwarranted concerns by SEBI that many of these FPI's indulge in money laundering. Instead of imposing such stringent conditions on all FPI's and harming the investor sentiment, it would prudent for the regulator to strengthen its enforcement mechanism and take action against those who have contravened the existing rules.”
     
    The circular issued on 10 April 2018 had said that NRIs, PIOs and overseas vehicles set up by Indian financial services groups cannot be 'beneficial owners' of FPIs. Under the Prevention of Money Laundering Act (PMLA) and the related rules, beneficial ownership means 25% ownership in a company or 15% in a trust or partnership. 
     
    All existing FPIs whose clubbed investment in equity shares of a company is in breach of the provisions of Regulation 21(7) of SEBI (Foreign Portfolio  Investors) Regulations, 2014 were  required to ensure compliance within six months from the date of the circular. SEBI had given market players six months to adhere to the new rules, which would have got over by 10th September. On 21st August, SEBI extended that date till 31 December 2018. 
     
    Alarmed by this, on 3rd September, a lobby of institutional investors and a top law firm advising it openly criticised the SEBI circular, describing the new rules as ‘racial discrimination’ that could lead to a sell off in stocks. It said that the SEBI "circular is vague, opaque, and confusing. It distrusts NRIs and resident institutional community… A Nigerian can manage an FPI but not an NRI or a large Indian group," said Nandita Agarwal Parker, president of AMRI, an association of FPIs. 
     
    AMRI and Nishith Desai, founder of law firm Nishith Desai Associates, jointly addressed the media on Monday. “We understand the government's concern over round-tripping. FPIs have no objection in disclosing who the beneficial owners are. But why restrict investments?” asked Mr Desai at the press conference. 
     
    Last week, a report from Times of India mentioned that the SEBI has taken ‘a strong exception’ to the contention as much as $75 billion will flow out of India due to changes regulations governing FPI, warning that market participants cannot threaten SEBI. Of the $450 billion investments by FPIs, $75 billion is estimated to be managed by NRIs, OCIs, PIOs and regulated resident institutions and individuals. However, SEBI has now effectively backtracked on its policy.
     
    You may also want to read...
     
  • Like this story? Get our top stories by email.

    User

    We are listening!

    Solve the equation and enter in the Captcha field.
      Loading...
    Close

    To continue


    Please
    Sign Up or Sign In
    with

    Email
    Close

    To continue


    Please
    Sign Up or Sign In
    with

    Email

    BUY NOW

    online financial advisory
    Pathbreakers
    Pathbreakers 1 & Pathbreakers 2 contain deep insights, unknown facts and captivating events in the life of 51 top achievers, in their own words.
    online financia advisory
    The Scam
    24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
    Moneylife Online Magazine
    Fiercely independent and pro-consumer information on personal finance
    financial magazines online
    Stockletters in 3 Flavours
    Outstanding research that beats mutual funds year after year
    financial magazines in india
    MAS: Complete Online Financial Advisory
    (Includes Moneylife Online Magazine)