The agencies probing the irregularities related to the National Stock Exchange’s colocation facility will try to unravel the ultimate beneficial ownerships (UBOs) of favoured brokerages and the big clients they served to find out who gained from the colocation system of India’s largest bourse, The Economic Times reported.
At present, the Central Bureau of Investigation (CBI) and the Income Tax Department are probing the colocation scam, while others could come in at a later stage if there were indications of money laundering.
According to reports, certain brokers benefitted from the preferential access on NSE’s trading platform between 2010 and 2015. The investigating agencies would now try to identify the last person or investment entities whose money these brokerages were handling.
The NSE had announced in 2009 that it would offer colocation facility to stock brokers who were willing to pay extra. As a result of this, some brokers could know the price feeds broadcast by NSE’s trading system earlier than their peers.
In 2016, consultancy firm Deloitte carried out a forensic review of the NSE facility and the brokers who allegedly colluded with some officials from the exchange to receive price feeds and execute trades before others. However, identifying the beneficial ownership was not among the terms of reference given to the consultancy firm at the time.
Last year, Deloitte had informed senior officials of a government agency that it was difficult to say exactly how much…
