The Central Bureau of Investigation (CBI) has questioned former National Stock Exchange (NSE) Group Operating Officer Anand Subramanian in a 2018 case related to the alleged abuse of server architecture of the exchange to provide access to a private company to the data before any other broker.
“Mr. Subramanian’s statement was recorded in Chennai over the past three days, till Monday. A CBI team has also collected the relevant documents from the office of the Securities and Exchange Board of India [SEBI] in Mumbai,” said an agency source. The CBI had earlier examined former NSE Managing Directors Chitra Ramkrishna and Ravi Narain. Look-out circulars have been issued against all the three.
The CBI had registered the case against stock broker OPG Securities and others, including unknown officials of the SEBI and the NSE. It was alleged that the company was given preferential access to the market data feed from the exchange’s server, via an algorithmic trading software package named “Chanakya”, ahead of other brokers.
Illegal access
During 2010-12, the company got illegal access to the NSE’s server architecture in connivance with the exchange officials through “co-location” facility, which allowed it to log in first to the server ahead of other brokers.
In 2012, a device facilitating distribution of network traffic across servers was installed by the NSE. While servers of all the other brokers were linked to the exchange’s primary servers, the accused company got access to the back-up server. As the back-up server had “zero load”, the company got expeditious access to the data feed.
Earlier, on February 11, the SEBI had levied penalty on Mr. Subramanian and the two former NSE Managing Directors on various counts, including irregularities in his appointment as Chief Strategic Adviser and then his re-designation as the Group Operating Officer and Adviser to the then Managing Director.
In its order, the SEBI differed with the NSE’s conclusion, which was based on a forensic report, that Mr. Subramanian was the unknown “yogi” with whom Ms. Ramkrishna had been sharing internal papers of the exchange. The Board said such documents were already accessible to him as he was the Chief Strategic Adviser to the Managing Director.
Mr. Subramanian, who was also in contact with the known person via email, was a major beneficiary of the yogi’s purported instructions to Ms. Ramkrishna. In January 2013, he was offered ₹1.68 crore for the post of Chief Strategic Adviser in the NSE, when his last drawn salary was ₹15 lakh in a government corporation. His compensation had shot up to about ₹5 crore by April 2016.
An email correspondence dated February 19, 2015 from the known person indicated that Mr. Subramanian had been instructed to make payments to the person as “gratitude” for the increased compensation, noted the Board.
I-T searches
Days after the SEBI order, the Income Tax Department had conducted searches on the premises of Ms. Ramkrishna and Mr. Subramanian in Mumbai and Chennai.
