Amid row over co-location case, SEBI refuses to disclose NSE inspection reports under RTI

The Securities and Exchange Board of India has refused to disclose under the RTI Act its inspection reports since 2013 related to functioning of the National Stock Exchange which is mired in controversy resulting from the market regulator’s damning report on alleged irregularities in the functioning of the bourse’s former chiefs.

Denying the information, SEBI responded to RTI activist Subhash Agrawal that the information sought by him pertains to its internal functioning, and disclosure of which may hamper decision making in its supervisory and regulatory role.

Using the Right to Information (RTI) Act, Agrawal had sought from the SEBI copies of its complete inspection reports in respect to the National Stock Exchange (NSE) from 2013 till date.

He told PTI over email: “It was mentioned in the RTI application that the Supreme Court of India considered inspection reports prepared by the Reserve Bank of India (RBI) in respect of banks (private or public sector) under the RTI Act.”

“With RBI being the regulatory body in respect of banks, SEBI being regulatory public authority in respect of the NSE is bound to provide inspection reports in respect of the NSE under provisions of the RTI Act. I had also requested for web-link, if any, having such information, and file-notings on movement of this RTI application,” Agrawal said.

Taking cover under Section 8(1)(d) of the RTI Act, SEBI said information sought includes commercial confidential information of other entities, the disclosure of which could harm its competitive position.

“In view of the above, the information sought is exempt under section 8(1) (d) of the RTI Act, 2005. However, information about any enforcement action taken by SEBI, is available in the public domain on the SEBI’s website: www.sebi.gov. in under the head ‘Enforcement’,” it said.

SEBI on February 11 had charged the NSE’s former chief executive officer (CEO) and managing director (MD), Chitra Ramkrishna, and others with alleged governance lapses in the appointment of Anand Subramanian as the chief strategic advisor and his re-designation as group operating officer and advisor to the MD.

Ramkrishna had told the regulator that a formless mysterious “Yogi” was guiding her over emails in taking the decisions.

The Central Bureau of Investigation (CBI) which expanded its probe in the co-location scam, after the SEBI report surfaced, has arrested both of them and told the court that the ‘Yogi’ is understood to be Subramanian who was alleged beneficiary of her decisions.

The agency, meanwhile, is focusing on retrieving email exchanges between Ramkrishna and rigyajursama@outlook.com.

Ramkrishna, who succeeded former CEO Ravi Narain in 2013, had appointed Subramanian as her advisor who was later elevated as group operating officer (GOO) at a fat pay cheque of Rs 4.21 crore annually.

Subramanian’s controversial appointment and subsequent elevation, besides crucial decisions, were guided by the unidentified person who Ramkrishna claimed was the ‘Yogi’ dwelling in the Himalayas, a probe into her email exchanges during the SEBI-ordered audit had showed.

In her statement to the SEBI, Ramkrishna had said that the unknown person having an email id rigyajursama@outlook.com was a ‘Sidha-purusha’ or ‘paramhansa’ who did not have a physical persona and could materialise at will.

Ramkrishna got elevated as MD and CEO on April 1, 2013 and left the NSE in 2016.

It was during this period that co-location was started by the stock exchange, the CBI has alleged.

In the co-location facility offered by the NSE, brokers could place their servers within the stock exchange’s premises giving them faster access to markets.

It is alleged that some brokers in connivance with insiders abused the algorithm and the co-location facility to make windfall profits.