The Securities and Exchange Board of India on Friday approved a ₹643-crore settlement—the largest in Sebi’s history—in a case involving the National Stock Exchange, former NSE chief executive Vikram Limaye and former chief technology officer Umesh Jain, among others
It was alleged that the NSE and its former top officials failed to take corrective action to stop or deter certain high-frequency traders from abusing technology, giving them an unfair advantage over other dealers.
Trading access point (TAP) technology is a software program that the NSE installed on trading members’ servers in 2008 to handle their connections and order communications on the NSE trading system.
Although the NSE replaced TAP with “trimmed TAP” in December 2013 and “direct connect” in February 2016, TAP was still in use in the equity segment as of September 2019.
High-frequency traders allegedly abused the TAP software in 2013 to obtain an unfair advantage, including avoiding transaction fees and carrying out orders covertly, according to a complaint filed with Sebi. During an inquiry into the colocation fraud involving former NSE chiefs Chitra Ramkrishna and Ravi Narain, the misuse was found in 2017.
Three whistleblowers revealed the scam when they claimed that they were given special access to some brokers, which let them make enormous profits at the expense of other brokers.
Sebi had earlier directed NSE to disgorge ₹624.89 crore, which was reduced by the Securities Appellate Tribunal to ₹100 crore. Eventually, on 3 September, Sebi closed proceedings in the colocation case against NSE and its officials, citing a lack of evidence.