Contradictory reports so far about the nature of the raids.
Two days after the NSE submitted reports from forensic auditors EY and ISB to SEBI, the IT department is believed to be raiding homes of top former and serving officials of the exchange.
According to a report in the Economics Times, the department has also searched the home of a broker who is believed to have got preferential access to the servers helping him make unfair profits.
Interestingly, the ET report states that the raid might not be linked to the preferential access issue, and that EY and ISB have given a clean chit to the exchange and its officials.
These conclusions however contradict the findings of two previous forensic audits, one by Deloitte and another by a committee of two IIT professors constituted by markets regulator SEBI which stated that NSE’s trading systems were vulnerable to exploitation.
Meanwhile, a report in Moneycontrol said that the list of officials including the names of former MDs Ravi Narain and Chitra Ramkirshna, Suprabhat Lala and promoter of OPG securities, Sanjay Gupta.
However, Narain told Moneycontrol that no raids were conducted at his house, a claim contradicted by IT officials who said massive searches are on and no one will be spared. In the NSE's co-location case, certain brokers, including OPG Securities, operating on its trading platform allegedly got preferential access to servers of the exchange.
A co-location facility provides early login and faster access to data feed of the exchange. Even a split-second faster access can yield huge gains for a trader. Queries sent to the NSE and OPG Securities on action by the tax department remain unanswered.
Officials said the action is based on "actionable inputs" suggesting tax evasion by a few entities linked to the NSE and also the co-location issue, where it is alleged that certain brokers operating on the trading platform allegedly made abnormal profits as a result of getting preferential access to the servers of the exchange. The co-location case is under the scanner of Sebi while the National Stock Exchange (NSE) earlier this week had submitted the forensic audit report on the issue, prepared by auditing firm EY, to the markets regulator.
EY was entrusted with carrying out the forensic audit into cash markets, currency derivative and interest rate futures platform. The nation's largest bourse had earlier engaged Deloitte for a forensic audit of its equity derivatives platform. In July, the NSE had approached the Securities and Exchange Board of India (Sebi) to settle the case through consent mechanism. The regulator has not responded to the proposal as yet, though. The controversy has delayed NSE's IPO plans. Its rival BSE already went public in January.
With inputs from PTI
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