[T.S.R:17555] NSE asked to pay Rs 55.5cr as fine: WSJ

By GURDEV SINGH VIRK OF DOW JONES NEWSWIRES

MUMBAI -- India's antitrust body directed the National Stock Exchange to pay 555 million rupees ($12.3 million) within 30 days as penalty due to violation of competition rules in the currency derivatives segment.

The order comes after the MCX Stock Exchange Ltd. - jointly owned by Financial Technologies India Ltd. and Multi Commodity Exchange of India Ltd. - had filed a complaint to the Competition Commission of India in November 2009, seeking probe into violations of laws by NSE.

MCX Stock Exchange - India's youngest exchange - had argued that the National Stock Exchange used its dominant position in the relevant market to eliminate competition and competitors in the currency derivatives, or CD, segment. NSE - India's largest stock exchange by volume of trades - had opposed the position.

MCX Stock Exchange offers trading only in the currency derivatives segment. NSE, on the other hand, offers trading products across all available and permitted segments such as equity, futures & options, and currency derivatives.

"There was a clear intention on the part of the NSE to eliminate competitors in the relevant market," CCI said in its order dated June 23, but released on its website Friday.

CCI ordered NSE to pay the penalty at the rate of 5% of 11.10 billion rupees - the average turnover for the three years ending March 31, 2010. The government body also directed the exchange to modify its zero price policy in the CD segment and ensure that the appropriate transaction costs are levied within 60 days.

"...our next course will be to claim the compensation for the losses and damages that we have incurred till now due to the predatory pricing [by NSE]," Joseph Massey, chief executive and managing director of MCX Stock Exchange, responded in a statement post the order.

NSE had waived the transaction fee for the CD segment as well as kept deposit requirements at a low level only with respect to the same segment, which are completely different to what it charges for its other segments. These are aimed at eliminating competition and discouraging potential entrants, MCX Stock Exchange had said in its complaint.

MCX Stock Exchange added that as a result it was also forced to offer the products on the same terms, thus suffering losses.

In a separate application to the CCI in July 2010, MCX Stock Exchange had claimed to have incurred a loss of around one billion rupees.

An NSE spokesman wasn't immediately available for comment.

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