NSE co-location case: CBI arrests Sanjay Gupta of OPG Securities

The Central Bureau of Investigation has arrested Sanjay Gupta, managing director of OPG Securities in the matter pertaining to the NSE co-location scam.

OPG Securities was among the entities that had preferential access to the co-location facility of the National Stock Exchange.

The broker allegedly had misused the co-location facility to get unfair advantage over the broader market.

A co-location facility is a service provided by exchanges where brokers and trading members place their servers on exchange premises to get faster access to market data and trading.

While co-location of servers is a globally accepted practice, it is often criticized for being unfair to traders who do not have access.

In NSE's case, the service was launched in 2009-10 without any standard processes, thus making the systems prone to manipulation.

Recently, the CBI conducted multiple searches in over ten locations with respect to the NSE- colocation scam. Essentially, these searches were done to establish if there were any financial gains made due to the unfair access to these brokers.

In 2018, CBI had registered a case against the company in a scheme involving certain data centre employees, Gupta and a few others obtained preferred access to the NSE server data from 2010 to 2014 using an algorithmic trading software.

They also obtained quicker data access through the exchange's secondary server by utilising the then-available co-location facility.