Imposition of fine on NSE by Competition Commission of India

1. Imposition of fine on NSE by Competition Commission of India Presented by: Neeraj Jain (2010130) Nikhil Beriwal (2010133) Section-C2DE

2. 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

3. 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

4. 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

5. SERVICES PROVIDED BY NSE Trading in Capital Market, Derivatives Market, and Currency Derivatives NSE also offers trading in Retail govt. securities

6. 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.

7. 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

8. 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

9. 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

10. 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

11. 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.

12. 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/