NSE co-location scam: Lens on role of brokerages

Investigative agencies are looking into the books of the brokerage firms that were allegedly involved in the National Stock Exchange co-location scam. They are checking whether these brokerage houses had recorded any unexplained jump in turnover during the period of the alleged scam and if any part of the profits accrued was paid as bribes to NSE officials for giving preferential access to the exchange’s computer servers, people in the know told ET.

Investigations into the affairs of OPG Securities, one of the accused brokerages, and the subsequent arrest of its managing director Sanjay Gupta have revealed instances of mirror contracts and the use of hawala networks to circumvent local laws and allow brokers take positions in foreign exchanges, the people claimed.

Former top NSE officials Chitra Ramkrishna and Anand Subramanian are among those who were arrested in the case. They all had denied any wrongdoing.


At least two central agencies — the income tax department and the Central Bureau of Investigation — are probing the alleged irregularities.

“The focus of the probe is to find out how much was the profit accrued by these brokerages that got preferential access. Therefore, their turnover during the period of the probe is being studied to see if there was an insubstantial rise in income they aren’t able to explain,” said an official speaking on the condition of anonymity.