Markets regulator Sebi has sought an explanation from the National Stock Exchange on alleged misuse of its Trading Access Point (TAP) software by some traders. In 2013 it is said to have quietly executed thousands of orders from some of its high-frequency traders, while keeping others on the sidelines. The fraud came to light four years later during the Income Tax authorities’ probe into the co-location scam.
The co-location case involves former NSE chiefs Chitra Ramakrishna and Ravi Narayan. NSE TAP was introduced in 2008 to monitor the number of orders placed by brokers in the stock exchanges. By doing this, NSE intended to recover transaction fees from them. NSE TAP sends order data to the stock exchange from multiple servers. Traders are said to have used special software to bypass the system. Apart from this, he also did not pay the fee for some transactions. IT officials came to know about this malpractice during a raid in 2017. In 2021, NSE appointed retired Kerala High Court judge Arvind Sawant to investigate the matter. In January last year, NSE had applied to SEBI to resolve the issue. In April 2022, SEBI returned the application saying that the investigation is still pending.
