A book that grabs the bull by the horn provides insight into NSE | Lifestyle News

New Delhi: Even as the latest book “Absolute Power: Inside story of the National Stock Exchanges amazing success, leading to hybris, Regulatory Capture and Algo scam”, co-authored with her husband Debashis Basu, which was launched in June on a second run selling only online, it makes sense to strike up a conversation with investigative journalist and author Sucheta Dalal — with Harshad Mehta. Not only because she wrote “The Scam: From Harshad Mehta to Ketan Parekh” (also co-author of Basu), but also broke the story for a leading newspaper about the broker who is revered by some even after his death as the ‘Dark Prince’ of Dalal Street.

“I don’t think there’s anything surprising about it. People who made easy money wanted the happy days to continue. We also have such a high level of corruption in India that it should come as no surprise that many people with that mindset, who is completely okay with giving and taking bribes and breaking the rules should see him as a hero and want prices to go up to keep giving them easy money,” said Dalal, who won the Padma Shri for journalism in 2006. received.

Her book was edited into ‘Scam 1992’, a web series.

In the latest book, the authors take a close look at the changes in capital market regulation and infrastructure following the Harshad Mehta scam – one of which was the establishment of the National Stock Exchange as a cleaner alternative to the age-old, scam and faction-driven BSE . However, the NSE itself became embroiled in the algo scam that originated in the sanctuary of the exchange: the co-location servers for high-frequency trading.

Talk to her about the decline of the NSE, a great model for a decade after its founding and she emphasizes that while there is no operational decline considering it is doing quite well, it simply cannot be seen as a role model. She believes that regulation has made it so profitable, and arrogance that has led to the algo scam.

“NSE built deep ties with the bureaucracy and political establishment and used its extraordinary profitability to silence all criticism. This placed it above any serious regulatory action and criticism. The board of directors, although eminent personalities, was always happy for his long string of questionable practices.”

As the third largest exchange in the world and a phenomenal success in establishing a professional exchange in the first decade, it managed to sell the idea that no one should do anything about NSE because it would hurt the market and investors, says Dalal: “Another important factor to remember is that NSE used its money power to fight all disclosure and scrutiny. It refused to submit to the Right to Information Act, despite an order from the Central Information Commission and a single court The Delhi High Court has appealed and dragged the case forward, and has also successfully avoided listing, while top management has given themselves globally calibrated salaries (approved by the board of directors), concentrating power. Treasury Department and the regulator have done nothing to change this status quo, meaning a true cleanup is impossible. To collect, the Treasury Department can simply issue an order asking all national exchanges to submit to the RTI Act. This will shed light on all exchanges and ensure that investors, activists and the public keep an eye on everything where government agencies seem unable to do so.”

Ask her how many ordinary stock investors don’t even know about ‘Big Boys Club’, and the author believes we’ve moved into a situation where the big boys do their own algo trading and small retail investors who have flocked to the stock market trade in full unregulated algorithm.

“This is dangerous because it will unleash chaos if there is a sudden crash. But SEBI seems unwilling to order the regulation and control of algo or have an urgent and open discussion about it. With 1.5 crore new investors in the market since March 2020, our investor population, which has been stagnant for more than two decades, will soon double. We have to prepare for contingencies, but there is no sense of urgency on SEBI’s part. It is absolutely not involved with private investors, NGOs or even those who write retail algos and warn of its dangers,” says Dalal, who also broke the Enron scam, the Industrial Development Bank of India scam, and the Ketan Parekh scam in 2001.

She believes that unless the regulator is on the alert and does not treat some entities like holy cows, we will always have a new scam.

“Remember that scammers are usually smarter, more daring and ahead of the regulator. Therefore, it is imperative that the regulator does not operate from an ivory tower and is subject to direct, televised oversight by parliament. But the capture of all regulatory posts to independent regulators by the IAS ensure that this will never happen unless there is a serious problem.The 1992 scam was a trigger for extensive regulatory changes.It will be a shame if we wait for another one before we do what is right.”

Talk to her about SEBI instructing ISB Hyderabad to quantify the illegal profits made by certain brokers who logged in first, and she says SEBI and especially the technical advisory committee have ordered at least seven investigations and many are continuing.

“It is completely unclear to me how and why ISB Hyderabad was selected or deemed competent to handle this, especially as it is the beneficiary of NSE funding. It is also important to ask why there has been no report for over six years is and when it will be placed in the public domain.”

Looking back at the time when she broke the story of Harshad Mehta that catapulted her to immense fame, Dalal recalls that it was an exciting time as the scam wasn’t just about Harshad Mehta but the entire banking system was entangled in dirty transactions and it ignoring the law with impunity.

And are news media investing in long-term investigations as much as when they broke Harshad Mehta’s story?

“It’s hard to say about the mainstream media that most of them engage in what I call vulture journalism — shutting up while a scammer flies high and then breathlessly doing daily reporting after a person is caught, like they did with Nirav Modi, Vijay Mallya and many others. Others. However, a lot of small media, independent media and even individual bloggers are doing a brilliant job and it is also being noticed and disseminated through social media. So not all is lost to investigative journalism.”

With a lot of new scams to put together, she’s currently working on another book.

“But let’s keep it under wraps for now.”