Thursday, September 28, 2017

NCLAT to hear MSE’s Rs. 856 crore claim on October 10th 2017

Hearing on MSE’s compensation claim after both Competition Commission of India (CCI) and Competition Appellate Tribunal (COMPAT) found NSE guilty

Mumbai, September 26, 2017: National Company Law Appellate Tribunal (NCLAT) will take up hearing of compensation claim of Metropolitan Stock Exchange of India Limited (“MSE”/”Exchange”) against National Stock Exchange of India Limited (“NSE”) relating to the predatory pricing policy adopted by NSE and the misuse of its dominant position in the industry, on October 10th 2017.

In 2008, both MSE and NSE launched currency future contracts in Indian markets almost simultaneously. NSE priced the transaction charges on these contracts at zero and given NSE’s dominant position, MSE was left with no choice but to adopt zero pricing as well. This made a significant and material dent on the financial position of the new Exchange. MSE filed a complaint with the Competition Commission of India (“CCI”) alleging predatory pricing (waiver of transaction fees, data-feed fees and admission fees etc. by NSE) wherein CCI found NSE guilty and imposed a fine of Rs. 55.5 crore. NSE filed an appeal to Competition Appellate Tribunal (“COMPAT”) which too found NSE guilty. NSE then moved the Supreme Court for relief and its appeal is still pending.

As per the process, the Exchange has filed an application for award of compensation against NSE for Rs. 856 crore before the COMPAT, pending the appeal. Now, as COMPAT has ceased to exist effective 26 May, 2017, all pending matters before the COMPAT stand transferred to the NCLAT.

Commenting on the upcoming hearing, Mr. Udai Kumar, MD & CEO of MSE said, “MSE started as a fast growing Exchange with immense potential when it was deeply impacted by the financial burden imposed by NSE’s predatory pricing. Speedier disposal of this matter is the need of the hour. It will encourage transparency and compliance with existing completion laws and practices across the spectrum and also dis-incentivize anti-competitive practises and misuse of dominant position.”

MSE, the youngest and the third national level stock exchange, is focused on enhancing fixed income and currency segments as part of its turnaround strategy. It’s currently in talks with MFs and AMCs to encourage participation without ignoring the equity segment. It recently launched a “Member Activation Drive” that will provide all infrastructural support to its members, various incentive schemes as well as lowest transaction charges on almost all product contracts. The Exchange has also introduced a Business Loyalty Program, called MY MSE, under which the members need to comply with several businesses and risk mitigating parameters to be eligible for the incentive. Among the incentive schemes, the Exchange is reimbursing Clearing Fee paid by its Trading Members to their Clearing Members, reducing the transactional cost of Brokers. The Exchange is also showcasing the usefulness of executing large equity trades on its platform.

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