Systemic risks posed by malpractices at NSE have shown weak response
Systemic risks posed by malpractices at NSE have shown weak response
sunday evening Chitra Ramakrishna’s arrest, the former MD and CEO of India’s largest stock exchange by the Central Bureau of Investigation (CBI) must change the course of the alleged misuse of exchange data by market players and the scathing – even real – one. The government fails. Nearly a month after a Delhi court passed a 190-page order by stock market watchdog, SEBI, CBI officials have been given seven days to question the former boss of the National Stock Exchange (NSE), which Ms. Ramakrishna made headlines for her claims about sharing. Confidential internal information with an unknown person. Separately, the CBI has got the extended custody of Anand Subramaniam, former group operating officer of NSE, who was hired at the behest of an unidentified yogi, for violating such internal controls and governance norms in such a systemic manner in financials. expected from an institution of importance. Market. The flashy details should not detract from the big questions arising from the deployment of co-location services and the lack of India’s oversight mechanism on its capital markets reflected in the multi-layered failure to crack down on wrongdoing at NSE.
Co-location services provided by NSE, which enable market operators to pay a premium on exchange trading data and refine their own algorithms for high frequency trades, permitted by SEBI But it was misused by some players. The case of NSE emphasizes the unfair advantage provided to certain brokers within its co-location user community. Whatever the defenders of such services may say, the premise of giving deep-pocketed players quicker and more informed than the average retail investor does not align with the open market philosophy. The non-functioning of the institutional mechanism, from the board and auditors of the NSE to SEBI, an independent regulator accountable to Parliament, is a major concern. Nearly three years have elapsed between SEBI’s ₹624-crore fine on NSE and the latest order against its former top executives for misusing its co-location services. A case where the sanctity of the entire market falls under one cloud should have been treated with more urgency. The special CBI court has observed that SEBI, which initiated the probe in 2016, has been ‘very kind and gentle’, while the CBI, after registering the FIR in 2018, has been the ‘weakest’. With a new SEBI chief, the finance minister-led government, which is reviewing the handling of the NSE matter, should ensure that the current governance structures take some preventive action, including a review of checks and balances.