The National Stock Exchange (NSE) on Monday filed a writ petition at the Delhi High Court seeking a detailed order from Competition Commission of India (CCI) on the basis of which it slapped a penalty notice on the exchange last week. The exchange in its writ petition has also asked the Delhi Court to direct CCI to give it more time to respond.
The CCI issued a penalty notice to NSE last week on a complaint filed by the MCX Stock Exchange (MCX-SX) alleging that the country?s largest bourse is abusing its dominant market position in the currency derivatives market. NSE was given time till May 16 to respond to CCI?s notice asking the exchange as to why a penalty of up to 10% of the average revenues for the last three years should not be imposed on them.
This roughly comes to about R100 crore in penalty, with NSE revenues being around R1000 crore a year in the past three years. The numbers for 2010-11 are yet to be published.
When contacted, the NSE spokesperson said that the exchange wouldn?t be able to comment as the matter was subjudice. However according to people familiar with the development, the exchange was not in a position to respond to the notice as it didn?t have full details of the CCI findings.
MCX-SX had approached CCI accusing NSE of using its dominant position to affect market behaviour. MCX-SX alleged that in the absence of NSE levying transaction charges for currency futures trade, it was forced to follow suit incurring huge losses on a daily basis.
The capital market regulator Securities and Exchange Board of India (Sebi) had earlier rejected MCX-SX application to commence equity operations, which had forced the exchange to focus on currency futures segment. While NSE and United Stock Exchange (USE), the latest to enter the derivative exchange business, were last year allowed to launch currency options contracts, MCX-SX were denied permission on the ground that the exchange didn?t comply with the ownership norms prescribed by the regulator, Sebi. The matter is currently being heard at the Bombay High Court.
At present the MCX-SX has a slight edge over the NSE in terms of market share in the currency derivative markets. In the current calendar year till date, MCX-SX has generated an average daily turnover of close to R17,000 crore while NSE has clocked an average daily turnover of R13,557 crore during this period.
