SEBI seeks clarification from MCX on forensic audit findings in IGIDR case

The Securities and Exchange Board of India (SEBI) has sought a clarification from Multi Commodity Exchange (MCX) and its Managing Director Murugank Paranjape, on the issue of preferential access to price feeds to Indira Gandhi Institute of Development Research (IGIDR). SEBI sought this clarification based on findings of the forensic audit report recently submitted by an audit firm, TR Chadha and Company. A source close to the development told Moneycontrol “IGIDR used MCX data for developing algo strategy.” Another source said, “MCX did not give live data to IGIDR." It is alleged that IGIDR passed on the data from MCX to a broker, who could use it to create algo strategy for trading. It has been debated if MCX should have shared the data with IGIDR. Another source in SEBI told Moneycontrol, “We will make a foolproof case. Earlier, we wrote to the chairman to conduct a forensic audit, which they have done. Now that the forensic audit report has been submitted, we want clarification from the exchange and the managing director on the findings. If they do not give a satisfactory reply then we have the option to take action against the exchange and the management”. In December last year, the audit committee ordered a forensic audit after a whistleblower complaint. In 2017 too, KPMG had done a forensic audit after a similar complaint against the exchange but found nothing adverse. A former SEBI official told Moneycontrol “After National Stock Exchange episode, no one wants to shut the case before a proper inquiry, as investigation agencies can open the cases after a few years and then blame regulatory officials also. Also, when the names of Ajay Shah and IGIDR came up in this case, the regulator became more cautious”. MCX did not respond to a query sent by Moneycontrol. The SEBI recently passed an order against NSE, its former officials, and Ajay Shah in the co-location case. However, three senior NSE officials got interim relief from the Securities Appellate Tribunal (SAT) and resumed work on May 7.