Compat rejects NSE plea for relief

Written by fe Bureau | Mumbai | Updated: Mar 31 2012, 08:22am hrs
The Competition Appellate Tribunal (COMPAT) has rejected an appeal by the National Stock Exchange (NSE) for an interim relief from maintaining separate accounts for each segment of the bourse. The tribunals decision would come as a body blow to Indias largest stock exchange that was looking for some last-minute respite after the Competition Commission of India (CCI) found it guilty of abusive behaviour in the currency derivatives segment.

lf any interim relief is accorded now, it would also imply that the direction of maintenance of separate segmental accounts would automatically slip to the next financial year, said COMPAT, in its order. ln any event, we have already made it clear that the final decision in this matter of maintenance of separate accounts in terms of Accounting Standard (AS) 17 can only be made by the competent body which regulates such matters, it added.

In its appeal, NSE contended that maintaining separate segment account would entail cost and would be time consuming to implement. It also said that it is not required under accounting standards AS (17) provisions. COMPAT, meanwhile, noted that if NSE is granted any interim relief now to maintain separate accounts, then the direction would automatically be pushed to the next financial year ie from April 2013.

The origins of the case go back to 2008 when NSE launched trading in currency futures and did not charge any fee for the same. This was challenged by MCX Stock Exchange (MCX-SX) that alleged that such policies are hampering competition. The argument was that NSE could afford such zero-pricing policy as it was earning substantial revenue from the equity segments, which was not the case with MCX-SX. According to sources, NSE is already evaluating its options and will soon decide on its future course of legal action.

In June 2011, CCI ruled in favour of MCX-SX, directing NSE to cease and desist from abusing its dominant position, levy a fee on all currency derivatives trade apart from imposing a penalty of R55.50 crore.