They said the cash, hidden in various wooden cavities of furniture and other items, was recovered and seized from the Delhi premises of a broker, identified as Sanjay Gupta, and his business partner.
Gupta did not reply to queries sent by the PTI. His phone as well as that of his family members were switched off.
A major chunk of the Rs 11 crore seizure from three locations in Delhi was from the place of Gupta's business partner.
The notes were stashed in wooden cupboards and are largely in the denomination of Rs 2,000, they said, apart from Rs 500 and others.
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Sources said while 27 locations were covered as part of the searches (where sleuths raid both home and business premises), the rest 17 were surveyed (raids at business premises only).
"Certain other incriminating documents have also been seized. The raids are still on," a senior official said.
The premises of Chitra Ramkrishna, former MD and CEO of the exchange, as also that of others formerly associated with NSE were also searched, they added.
There was no immediate response to query sent to Ramkrishna.
In the NSE co-location case, certain brokers, including Gupta's OPG Securities, operating on its trading platform allegedly got preferential access to servers of the exchange.
The NSE and brokers being raided by the department have not commented on the action till now.
Officials had said the action is based on "actionable inputs" suggesting tax evasion by a few entities linked to the NSE and also the co-location issue, where it is alleged that certain brokers operating on the trading platform allegedly made abnormal profits as a result of getting preferential access to the servers of the exchange.
The co-location case is under the scanner of Sebi while the National Stock Exchange (NSE) earlier this week had submitted the forensic audit report on the issue, prepared by auditing firm EY, to the markets regulator.
The nation's largest bourse had earlier engaged Deloitte for a forensic audit of its equity derivatives platform.
In July, the NSE had approached the Securities and Exchange Board of India (Sebi) to settle the case through consent mechanism. The regulator has not responded to the proposal as yet, though.
The controversy has delayed NSEs IPO plans. Its rival BSE already went public in January.
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