Former NSE bosses Ramkrishna, Narain face Sebi questions over colocation

The Securities and Exchange Board of India (Sebi) questioned the National Stock Exchange’s (NSE’s) former chief executive officer Chitra Ramkrishna and vice-chairman Ravi Narain in connection with the colocation (colo) controversy.

According to sources, both were summoned last week as part of a probe in the colo matter. The two were asked to clarify on certain issues and their statement was recorded in a detailed manner, said a source, adding the regulator wants to conclude the investigation by end of this month. 

“Questioning took place at Sebi headquarters. It went on for a few hours,” said a person privy to the development.

Ravi Narain, former vice-chairman, NSE

The questioning was around the probe findings, which indicates possible collusion between some former employees and brokers, who had allegedly gained unfair access to data feed between December 2012 and May 2014.

A query sent to both remained unanswered.

On March 28, Sebi’s board had vetted the investigation report against at least 20 brokers.

The market regulator is in advanced stages of completing the investigation. It had issued show-cause notices to the exchange and 14 officials for allegedly violating securities contracts rules and stock exchange clearing corporation norms. The notice had mentioned failure on the part of NSE officials in ensuring fair access and their non-cooperation during the probe.

Sebi’s show-cause notice to Narain had said since he was at the helm when the breach took place, he must explain why action should not be taken against him, said a person who was aware of the notice’s contents.

Narain had stepped down last year soon after the notice was served, while Ramkrishna quit as managing director and chief executive officer on December 2, 2016.

Chitra Ramkrishna, former chief executive, NSE

The regulator had last month returned the NSE’s consent application, citing pending investigation.

According to regulatory sources, the plea was returned as the probe is at a critical stage. The NSE, along with some of its former and current employees, had submitted its consent application on July 28 last year.

Depending on the outcome of the Sebi probe, these entities served with show-cause notices will get a chance to file fresh consent pleas.