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What CBI ‘found’ in the NSE roommate scam case

New Delhi: The owner and promoters of OPG Securities – the Delhi-based brokerage firm at the center of the colocation scam case at the National Stock Exchange (NSE) – deleted crucial evidence, including their conversations and emails with employees of NSE, the Central Bureau of Investigation (CBI), which is probing alleged stock market manipulation, found.

Agency sources told ThePrint that between 2010 and 2014, Sanjay Gupta – owner of OPG Securities and one of the main defendants in the case – and his co-defendant used a secondary server intended for emergencies to obtain “preferential access to NSE data”, which gave them a advantage over other brokers.

Gupta, who was stopped in the case in June of this year, had also reportedly hired software engineers Aman Kokrady and Vivek Goenka to develop the software they used to connect to the server.

These findings were recorded in CBI’s supplemental indictment which was filed on August 19. Apart from Gupta, Kokrady and Goenka, the indictment names Abhilasha Kukreja, a data analyst at OPG, and former chief executive and managing director of NSE, Chitra Ramkrishna, agency sources said.

ThePrint contacted OPG Securities by email and telephone, but no response was received prior to the publication of this report. The report will be updated once the response is received.

In its indictment, the CBI allegedly claimed that NSE data center staff helped OPG gain access to the company’s backup servers between 2010 and 2014, giving it an unfair advantage over other brokers, who do not could only access the main NSE servers.

The backup servers, being for emergencies only, had “no load,” allowing better and faster access to market feed and resulting in unwarranted gains for Gupta’s company, sources said.

“OPG Securities had all-day access to the secondary server, which is otherwise a backup and intended only for emergencies, such as when the primary server distributing the data goes down,” a source told ThePrint, adding, “But as OPG was the only one connected to the secondary server, they get the data faster due to low load, giving them an unfair advantage. For this service, they had paid bribes to NSE employees. »

The source further said that investigators found that the company deleted numerous records of communication with NSE employees – all crucial evidence in the case. Some of the deleted evidence was recovered from devices seized during the investigation, the source added.

The agency also found that when the NSE switched to a “multicast server from a unicast server”, OPG “stopped working as well”.

A unicast server is a server where information can be broadcast from a single source while a multicast server broadcasts information from multiple sources.


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Inequitable access, split-second advantage

The NSE roommate scam concerns allegations that date back a decade. The CBI first filed an FIR in connection with the scam in 2018. In its first indictment in April, the CBI appointed Chitra Ramkrishna and former NSE COO Anand Subramanian. The agency had stopped Subramanian in February and Ramkrishna in March as part of the case.

A co-location setup allows the broker’s computer to be located in the same area as where the exchange’s server is located. This gives a speed advantage of about ten times that of other brokers.

According to CBI sources, Gupta bribed NSE employees to gain unfair access to NSE’s colocation facility between 2010 and 2014, in order to give his company that advantage.

Sources claim that until 2014, information was disseminated by the NSE server to brokers attached to the colocation facility via a tick-by-tick (TBT) based system architecture.

In this architecture, data was released in a “sequential” fashion, and the broker who first connected to the exchange server received ticks – i.e. market feed – before the one who s logged in later.

The alleged inequitable access to this co-location facility meant that Gupta’s OPG Securities could connect to the secondary server first and get the data before anyone else.

“[This] enabled faster split-second access to the NSE data feed,” the source said, adding that even a fraction of a second faster access could result in huge gains for a stock trader.

Gupta also allegedly bribed NSE data center staff to provide him with information about what time the exchange’s servers were on, resulting in illegal gains for his company, agency sources said. .

(Edited by Uttara Ramaswamy)


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