The Securities and Exchange board of India (Sebi) surveillance team has conducted a special inspection of the books of the Delhi- based technology firm OPG securities to check if it got unfair access to National Stock Exchange Ltd (NSE) co - location server, said a source privy to the development.
Sebi officials visited trading firm premises in New Delhi last week and quizzed some of the executives. Regulator believed to have also sought trading data for the period of three years (2011-2014).
"It is important to quantify the extent of the illicit gains made by the trading members before finalising the matter," said another person who is aware of the development.
The entities could face suspension or monetary penalty if found guilty, the person added.
Chief executive officer ( CEO) of OPG Securities Sanjay Gupta, refused to comment on the development.
Sebi began probing the matter in early 2015 after it received at least three complaints which alleged that certain brokers including OPG Securities colluded with NSE's employee/outsource staff of NSE to obtain information regarding load and starting of server including back-up server.
According to Sebi, the complainant also alleged that the NSE's system set up enabled "first-to-connect" stock brokers to receive data ahead of others.
Sebi's technical advisory committee (TAC) submitted its first report in March 2016 which said that OPG Securities was able to log in consistently to the servers with better hardware specifications. The committee also mentioned irregularities by brokerages AlphaGrep, a high-frequency trading firm, trading member GKN on use of dark fibre technology provided by Sampark (Infotainment).
Meanwhile, NSE is also closely examining the issues and is said to have sent show cause notice to OPG Securities seeking stance of the trading firm. Sources said that the exchange would accordingly decide further course of action. "We examined all the data including conversation ratio of orders turning to trades, source in exchange said.