Lok Sabha Question No. 3946 (UNSTARRED), answered on 2018-08-10
Subject: Co-location Scam
Ministry: FINANCE
Asked by: KIRIT SOMAIYA

## Govemment  of India Ministry of Finance Department  of Economic  Affairs

## LOK SABIIA  UNSTARRED  QUESTION  NO. 3946 TO BE ANSWERED  ON FRIDAY, AUGUST  10, 2OIS/SHRAVAI\ 19' 1940 (SAKA) CO-LOCATION  SCAIVI

## 3946  : DR. KIRIT SOMAIYA

Will the Minister  of FINANCE  be pleased  to state:

(a) whether the Reserve  Baak  of India has forwarded  the case of National  Stock  Exchange  (NSE) coJocation ,.".,  ror. of Public  Finance  and Policy  to securities  and Exchange Board of India (SEBI),  if so' the details thereof;

(b) whether  SEBI initiated  action agaiost  NSE and OPG Securities for colocation  scam, ifso, the details  thereof;

(c)  the role  ofone ofthe  professors  working in the National Instifitte  ofPublic  Finance  and Policy in the scam;

(d) whether the Govemment  is aware  about the non-transparent  functioning/behavior of the professor who had p.ofit  rh"ring.ontracl  with OPG  Securities  and ifso, the details thereof; and

(e) the findings  of the Income Tax Department, SEBI Capital Marker Division  NSE in this scam and the action taien against all the persons who are involved  in this scam?

## ANSWER

## MINISTER  OF STATE IN TEE MINISTRY OF FINAIICE (SHRI  PON. RADHAKRISIINAI9

(g): Yes Sir, a complaint  dated  14 February 2017 in the matter of National  Stock  Exchange (NSE) co-location ,,, ** forwarded  to Securities and Excilange  Board of India (SEBD by Reserve  Bank of India  (RBl) on 9 March 2017.

o):  SEBI has completed  its investigation  against NSE and oPG Securities  in the colocation matter  and has initiated  enforcement  proceedings  against them.

(g): SEBI has examined the alleged role of one of\_the professors associated  with National  tnstitute of Public :F.an"" una  policy Q.1IpFp)  in rJlation to his association  with NSE and accordingly, enforcement  proceedings have been initiated  against various entities/persons,  including  the said professor'

(d): SEBI  examination,  inter ali4 observed  that the professor  had employed a devicel scheme/ adifice,  wherein ili confidential  and sensitive  data provided  Uy NSE was misused  itl fraudulent  manner,  which resulted in .".pro.i.ing  th. integrity of the ...uriti". marliet. Also,  special  treatment  was given to the  professor  by NSE in access  to conidential  and sensitive  data  without  formal  agreement and data  use contract.

(9): Based  on the findings  of the investigation,  SEBI has initiated enforcement  proceedings  against NSE,  its ffir;;; preseot offi"ii-ts, stock  brokers;their  directors/ employees  and other connected  enlities/individuals for ,loruiion  ofp.orisions  of Securities  Contracts  (Regulation)  Aci, 1956, SEBI (Prohibition  of  Fraudulent  And Unfair Trade  practices  Relating To Securities  Market)  Regulations,  2003,  SEBI  (Stock-Brokers  and Sub'Brokers) n"grfutiorr, 1992,  Securities  iontracts  (Regulation)  (Stock Exchanges  and Clearing  Corporations)  Regulations, 2012 and various  Circulars/  directions issued  under SEBI Act,1992'

Central  Board of Direct Taxes  (CBDT) has informed  that on the basis of credible  information  regarding  tax evasion,  the Income Tax Department tai<es  appropriate  actions against  such  tax evaders as per the provisions  of in."r.'f* Act, 1961, depending upon til; facts and circumslances  of each case, These actions include conducting  searches and ,r*aya,  i*ra".r*ant of income,.levy  and recovery  of tax' imposition  of pcLralty  and launching"of  prosecution.  Howiver,  disclosure of information  in respect of specific  assesses  is prohibited,  except as provided under section 138 ofthe Act.