A rejoinder

This is with reference to the article titled “Eminent yes men behind NSE” by Debashis Basu, published in the Business Standard on February 28, 2022. The article describes at great length the problems with the appointment of Chitra Ramkrishna and Anand Subramanian at NSE. The entire set of events at NSE described in relation to these events are dated November 6, 2012 and beyond. I demitted office in February 2011.  

In the column, there is a reference to colocation scam as having happened between 2010 to 2014. The Securities and Exchange Board of India’s order on colocation was passed in February 2021. It is a long order, but right in the beginning, the order states that the first complaint with regard to the abuse of the colocation facility was received by Sebi on January 8, 2015, almost four years after I left Sebi. The article which mentions dates of appointment of Chitra Ramkrishna, formation of selection committee etc. fails to mention the date on which Sebi received the first complaint on colocation. Colocation was started in 2010 but by itself it is not a scam. It is a facility common in other jurisdictions as well. The scam was that an unfair advantage may have been provided to a broker(s) vis-a-vis the other brokers. This was brought to the notice of Sebi in 2015.  One could ask why it took Sebi four years (2015 to 2019) to pass an order in a matter in which the integrity of the market was questioned. However, it is clearly not for me to answer this.

Colocation facilities were offered by NSE to the brokers from 2010 onwards. When did the misuse of this facility start? We have no explicit statement on this in the Sebi orders. However, the order against OPG Securities gives us enough clues. 

Sebi punished OPG Securities for connecting to the Secondary POP server on 135 days between January 2010 to April 5, 2014. (para 8.43). The profits of those days were considered illegal and OPG was asked to disgorge them.  The preceding para 8.42 clearly states that the “connection to the Secondary POP server was first established on December 11, 2011.”  No connection was made to the Secondary POP server before December 11, 2011.  Sebi’s finding, therefore, is that there was no wrongdoing prior to December 11, 2011, that is till ten months after I left Sebi.It follows that the scam did not occur during my time at Sebi and it was brought to the notice of Sebi four years after I left the organisation.

The author is entitled to his opinion. But in the face of all these dates in these two cases, to drag my name and to say that worst things happened during my tenure is at best biased and at worst defamatory.

The author was Sebi Chairman between 2008 and 2011 

(Edited Excerpts)