Imposition of fine on NSE by Competition Commission of India

Presented by: Neeraj Jain (2010130) Nikhil Beriwal (2010133) Section-C2DE

PRESENTATION OUTLINE

Introduction about NSE, CCI & MCX-SX Services provided by NSE About the penalty Features of the penalty The reaction of NSE towards the penalty

COMPETITION COMMISSION OF INDIA

It was established in 14 October 2003 It has been started to support the objectives of

Competition Act, 2002 It is an independent authority of Indian

Government and the Competition Watchdog Its main objective is to promote economic

efficiency through competition

NATIONAL STOCK EXCHANGE

It is the leading stock exchange of India Nifty is the calculator for NSE Nifty is derived by the performance of 50 large cap

companies that are within NSE NSE has a market capitalization of

around US$1.59 trillion NSE has over 1,552 listings as of December 2010

SERVICES PROVIDED BY NSE

Trading in Capital Market, Derivatives Market, and Currency Derivatives

NSE also offers trading in Retail govt. securities

MCX - SX

MCX Stock Exchange (MCX-SX), was launched on October 7, 2008

MCX-SX offers currency futures contracts in USDINR, EURINR, GBPINR and JPYINR.

Clearing and Settlement is conducted through the MCX-SX Clearing Corporation Ltd (MCX-SX CCL).

Daily turnover on July 1st was 18635 Cr.

REASONS FOR THE PENALTY

NSE was abusing its dominant market position

It adopted unfair trade practices and predatory pricing

NSE reduced trade related fees to discourage other entities.

Its clear intention was to eliminate competition from the market

A complaint was filed by NSE’s young rival MCX-SX

SIMILAR EVENTS IN THE PAST

In 2000, NSE waived transaction cost in equity derivatives segment

In gold ETF segment NSE reduced charges

Strike in 2009 by film producers who decided not to screen movie in multiplexes over payment matters

FEATURES OF THE PENALTY

Penalty involves a sum of 55.5 Cr fine

The penalty is equivalent to five per cent of the NSE's three-year average turnover

Order was given to terminate the subsidizing service immediately

The fine has to be paid within 30 days

REACTION OF NSE

NSE considered to decide its future course of action after studying the legal aspects

It can challenge the decision at Competition Appellate Tribunal or the Courts

It would act after obtaining the opinion of their legal advisors

FUTURE CIRCUMSTANCES NSE MIGHT FACE

MCX-SX is planning to file a case for claiming the compensation for the losses and damages

Its due to NSE's predatory pricing and other anti-competition moves

The sources have estimated that the claim could be near about Rs 450-500 Cr.

REFERENCES

http://www.nseindia.com/ http://www.thehindubusinessline.com/ http://competitionlawyer.blogspot.com/ http://www.thestatesman.net/ http://economictimes.indiatimes.com/ http://www.mcx-sx.com/ http://www.cci.gov.in/