The National Stock Exchange (NSE) has sought crucial information from more than 15 brokers, including some of the leading intermediaries, in a bid to know the locations from where equity derivative orders were placed between January 2020 and March 2022. Notably, the exchange witnessed an abnormal jump in futures and options trade volumes, and on-boarding of new clients by most brokerages during the Covid-19 pandemic months, a newspaper report has said.
Further, the exchange has asked the member brokers to disclose the know-your-customer (KYC) details and ledgers of their clients, ID of devices used to place the trade orders, IP addresses and the media access control (or MAC) address, which is a unique number found in all internet-ready devices, including mobile phones, the Economic Times reported, citing two people aware of the development who refused to be identified.
Moneycontrol couldn't verify the report independently.
Focus on local clients
“It is evident that exchange authorities want to know the locations of the traders. Maybe they are examining whether sub-brokers of franchisees in remote locations had accessed user IDs and passwords of a large number of unrelated investors for derivative trades … Also, the exchange could be looking into whether orders were placed from outside the country,” chief technology officer of a large brokerage told the financial daily.
The surveillance department of the exchange had sought details, mainly related to local clients, last Friday. The F&O volumes on NSE rose approximately 737 percent between January 2020 and March 2022. The average daily F&O volumes were Rs 140.25 lakh crore in March 2022 against Rs 16.75 lakh crore in January 2020, the report mentioned.
Unusual surge
The daily quoted Mitil Chokshi, senior partner at chartered accounting and forensic firm Chokshi & Chokshi, as saying, “It seems the focus is on many high net worth clients whose F&O trading volumes had suddenly shot up. The exchange may also be looking into how algo trading has been used.”
More importantly, the exchange wants to know the reasons behind an unusual surge in trade volumes by a set of clients.
Another person told the daily that the IPs generated when an order is placed would show the locations and would confirm whether orders were placed from multiple locations, especially when curbs on mobility were in place because of the pandemic.
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