Focus on the OPG Securities

What Is the Co-location Facility?

To better understand the scam, you need to get a clear-cut understanding of the co-location facility. In layman’s language, co-location is a space where you would get to know the stock prices a bit earlier than most of the crowd, thanks to the highly computerized system. Several algo traders rent out these areas for trading in the market....

Co-Location and Tick-By-Tick!

Tick-By-Tick, or what is known as the TBT, is one sort of data feed where the information doesn’t get distributed uniformly among all the parties. Therefore, because of the co-location facility, big algo, and high-frequency traders came to know the information earlier than the masses....

Who Understood this Loophole?!

Every scam occurs because of a mastermind who understands the loophole. In the case of the co-location scam, OPG Securities was one such mastermind who realized the TCP/IP protocol loophole that the TBT system used to distribute the data. OPG Securities understood how to access the data before others and even took help from some NSE officials....

Focus on the OPG Securities

On further digging, other names came to light, and one such name was Omnesys. The company was in charge of NSE’s technology and even had the National Stock Exchange as its investor till 2013. The Delhi-based OPG Securities was wise enough to hire a former Omenesys employee for a much better understanding of the exchange’s system. Apart from this, the firm took the help of Chitra Ramakrishna, the NSE CEO, back in those days, and she appointed Subramanian....

Unfolding the Scam

According to officials’ statements, the scam came to light when a whistleblower complained about the co-location issues to the SEBI authorities in 2015. After that, the complete scenario of fraud happening behind the screen was disclosed to the general public. When Moneylife revealed the scam, the management of NSE took a severe step toward the media authorities and even filed a 100 crore defamation case against Moneylife. Things got worse when the matter progressed to the High Court eventually....

Actions Against OPG

In action taken by SEBI against this scam, the board ordered OPG securities in 2019 to pay back the unfair means of profit they earned during the period. As per the sources, the profits amounted to 25 crores, and SEBI even levied an additional 12% on the profits made from 7th April 2014....

Understanding the Complications: Is NSE Co-Location Scam the biggest Indian Stock Market Scam?

Interestingly, there hasn’t been concrete data on how much profits these traders made by taking advantage of the preferential access to the co-location facility. While some have stated the scam to be around 50,000 crores, others have reported it to be a 75,000 crores scam. If we consider the whistle-blower’s report, there was an outflow of confidential data to other countries, including Singapore. After so many years of the scam, officials are yet to disclose the exact number of foreign and national players who took the help of the NSE employees for misusing the data. While SEBI imposed crores and lakhs on the top management employees who came to the limelight, several others have criticized this step as not an adequate measure compared to the unfair profits made in real life....

The fate of TBT Data Feed: Is it Still Used Today?

Whenever a scam happens, people lose confidence in the market. SEBI tried its best to deal with the criticalities and started to frame stringent rules for restoring people’s trust and regulating the system and exchanges....