Co-location case: SEBI bars Ajay Shah, others from association with all SEBI-recognised entities for 2 years

The Securities and Exchange Board of India (SEBI) has barred Ajay Shah, Infotech Financials, Krishna Dagli, Sunita Thomas and NSE Assistant Vice President, Trading Operations, Suprabhat Lala from being associated with any entities recognised by the markets regulator for a period of two years on April 30.

Also read: Co-location case: SEBI bars NSE from securities market for 6 months; directs exchange to 'disgorge' Rs 625 cr

It was alleged that Ajay Shah, who had collected NSE trade data in 2005-06 under the pretext of research activities, developed a software that was sold to select brokers who are at the centre of the co-location controversy. These brokers had availed the server co-location facility, got preferential access to the exchange’s trading system and somehow managed to connect to the exchange’s back-up server to access the price feed faster, giving them an advantage over other brokers.

Also read: What is the NSE co-location case?

According to the order released by the markets regulator, “It was observed that these persons, with active support of NSE and its senior officials have misused the confidential and sensitive data provided by NSE for being used in the LIX project, to develop algorithmic trading software for sale in the securities market, thereby compromising the integrity of securities market…”

Krishna Dagli and Sunita Thomas are the directors of Infotech Financials, and Thomas the wife of Ajay Shah.

Also Read: How Ravi Narain built the NSE, and then lost the grip

In its order, SEBI directed the following:

-Ajay Shah will not hold, directly or indirectly, any position in the management of and/or in the board of or be associated in any manner and in any capacity, with any stock exchange, clearing corporation, depository, recognized or registered by SEBI and/or with any intermediary registered with SEBI or their related entities and/or with any company listed in any of the Stock Exchanges recognized by SEBI, for a period of two years.

-Infotech Financials, Krishna Dagli and Sunita Thomas will not provide any services to and/or be associated in any manner and in any capacity, directly or indirectly, with any stock exchange, clearing corporation, depository, recognized or registered by SEBI, and/or with any intermediary registered with SEBI or their related entities and/or with any company listed in any of the stock exchanges recognized by SEBI, for a period of two years.

-Suprabhat Lala shall not hold any position, either directly or indirectly in or be associated, directly or indirectly, with any stock exchange, clearing corporation, depository, recognized or registered by SEBI and/or in any intermediary registered with SEBI or any of their related entities, for a period of two years.