Probe Chidambaram's NSE interest: Jignesh Shah

Calling co-location a "super white-collar crime" that can generate billions of dollars of illegal gains in a fraction of a second, embattled businessman Jignesh Shah has said the government needs to probe the role of former finance minister P Chidambaram and others during the previous UPA regime in allowing a top stock exchange to offer this preferential facility to select brokers.

Shah, who was known as 'India's Exchange Man' for launching 14 exchanges across six continents including the top commodity bourse MCX before he had to exit all those businesses in the aftermath of the Rs 5,600-crore payment default at his erstwhile FT Group's agriculture spot exchange NSEL, blamed Chidambaram squarely for all the troubles his business empire had to face.

He said India could have become the 'price-setter' for the world financial market if "illegal" roadblocks had not been created for him.

"It was a big loss of opportunity for us as we were on top in all the exchanges we had set up and we were to replicate the same success with the stock exchange we were starting, but in the process India also lost the opportunity to become the world's top financial marketplace as the same momentum cannot be resumed now and the exchange space has already gone back to the level where it was many years ago," Shah told PTI in an exclusive interview.

Launching a no-holds-barred attack on Chidambaram, Shah said the former finance minister targeted him to protect the interest of his "pet exchange" as their dominance was threatened by MCX-SX, which had got the licence to run a full-fledged stock exchange and was in process to launch operations before the NSEL crisis broke out.

While Chidambaram is in judicial custody in connection with another case, the NSE (National Stock Exchange) officials have denied any role in the NSEL case and have also rejected allegations of its co-location facility favouring select few.

NSE has been at the centre of the controversial co-location case and some of its top ex-officials had to quit also, but the regulator Sebi recently exonerated some former senior executives of the exchange after its probe and asked the bourse to take suitable action against a few others.

Co-location typically refers to certain traders getting trading terminals very close to the exchange servers and it is generally understood that this preferential treatment helps them as even a fraction of a second advantage in getting the price and other trade-related data can result in billions of dollars worth of gains.

Shah said he became a target for challenging some "really powerful people and their money-making and money-laundering machines".

"We were number one in commodities trading, electricity, currency, bonds and in everything we were doing and we had got the licence for a stock exchange where the NSE had a dominance," he said.

"It was an employee fraud that happened at NSEL in connivance with defaulter brokers. And parallel to this, a political conspiracy was hatched to benefit the NSE," Shah said as he accused Chidambaram of all the actions against his group.

"They wanted to eliminate us from the exchange space because we were the only competition to their pet exchange," he said while urging the government to probe the interest of the Congress leader and of people close to him in NSE and in the controversial co-location facility.

63 Moons, the holding company of Shah's businesses that was earlier known as Financial Technologies India Ltd, has filed a defamation suit in the Bombay High Court, seeking Rs 10,000 crore in damages, against Chidambaram and two bureaucrats, alleging it was facing continuous "targeted and malafide actions" in the wake of an "engineered payment default crisis" at NSEL.

Chidambaram is facing summons from the high court for the defamation suit and had sought a copy of the complaint and other documents days before his arrest by the CBI on August 21 in connection with an alleged corruption case involving INX Media.

Shah, who was jailed and released thrice between 2014 and 2016 (first by Mumbai Police's Economic Offence Wing in May 2014 and then by Enforcement Directorate and the CBI in 2016), said he always has had great faith in the judiciary and his stand is getting vindicated by the court orders one after another as no agency has found any money trail to him or his group firms for even a single paisa.

Shah alleged the co-location technology can facilitate a "super white-collar crime", as even a fraction of a second advantage to trading terminals can result in billions of dollars worth of illegal gains.

"The NSEL was our smallest exchange. An employee fraud happened there and we were the first to complain against all 24 defaulters to the regulator and to the police," he said.

Shah said the defaulters had agreed to pay back in front of the regulator, brokers, traders and the exchange, as all transactions had happened through the banking channel and the entire money trail was established.

"The regulator had powers for recovery and attachment, but orders from the Finance Ministry at that time derailed the entire process and they unsuccessfully tried to put the entire blame on him.

"The purpose was to finish Jignesh Shah who was group chairman of 14 exchanges across six continents and his businesses were taken away one after another by arm-twisting," he alleged.

"However, now I am hopeful that the process would by put on the right path and fast-tracked as there is a strong and committed government under Prime Minister Narendra Modi that can act against all wrongdoers decisively," Shah said.

"I urge the government to investigate Chidambaram's interest in NSE, including in its ownership and in their co-location trading," he said.