NSE challenges CCI order in Competition Appellate Tribunal

In its appeal before Compat, NSE has asserted that it had been wrongly charged of leveraging its dominance in equity and other segments for benefit in currency derivatives market and the charge had no basis either in facts or laws

New Delhi: Leading stock exchange National Stock Exchange (NSE) yesterday approached the Competition Appellate Tribunal (Compat) against a CCI (Competition Commission of India) order that pronounced it guilty of abusing market dominance and imposed a fine of Rs55.5 crore on the bourse, reports PTI.

In its appeal before Compat, NSE has asserted that it had been wrongly charged of leveraging its dominance in equity and other segments for benefit in currency derivatives market and the charge had no basis either in facts or laws.

The exchange has further claimed that the Competition Act did not envisage low price, which is not predatory, as an abuse of dominance, sources said.

NSE has further told the tribunal that CCI order was ‘antithetical’ or contradictory to the principal purpose of the Competition Act, which was to protect and promote consumer welfare.

In its order dated 23rd June, CCI had imposed a Rs55.5 crore fine on NSE for abusing its dominant market position and asked the bourse to stop unfair trade practices like subsidising its services with a zero-price regime in currency derivatives segment.

Imposing a penalty equivalent to 5% of the bourse’s three-year average turnover, CCI had said that there was “a clear intention on the part of NSE to eliminate competitors in the relevant market”.

The CCI order followed months-long probe by it into the matter after a complaint from NSE'’ younger rival MCX-SX.

In its appeal before Compat, NSE said it was forced to announce charges in currency derivatives segment after the CCI order and there were indications that its two rivals, MCX-SX and United Stock Exchange (USE), would also levy charges.

The move has already resulted in significant drop in trading volumes in currency derivative (CD) segment to the detriment of consumers, NSE has asserted.

Since NSE’s 12th August announcement of transaction charges, its currency derivative market turnover has fallen by about 8%-9%, pushing it to the third position in the market after MCX-SX and USE.

Also, its market share has fallen to 36% currently, from initial 100% in August 2009 when it entered the currency derivatives market as the first player.

NSE has said that it has mostly been number two in this market and zero-pricing strategy has developed the market, which was evident from growth in trading volumes so far.

Trading in currency futures segment has seen a rapid growth ever since its launch and the daily average trading volume has crossed Rs18,000 crore, from a turnover of Rs291 crore on the first day of trading on 29 August 2009.

NSE said it had waived the charges for benefit of the market and the consumers, and all market players, including exchanges, members and consumers, benefited from it.

NSE has sought relief from Compat on payment of penalty of Rs55.5 crore, as also from the requirement of maintaining segmented accounts and from any compensation claims that might be filed by MCX-SX or any other third party.

After the CCI order, MCX-SX had said it would look at claiming compensation for the losses and damages suffered by it due to NSE’s anti-competition business practices.

While MCX-SX did not quantify the compensation to be sought, sources pegged the claims at Rs400-Rs450 crore, including Rs150 crore of losses suffered by the exchange in currency derivatives business due to NSE’s zero-pricing.

NSE announced last week that it will start levying charges for currency derivatives trading from 22nd August, in deference to the CCI order.

On another matter concerning the trading software solution ODIN, NSE said in its appeal that the CCI passed a judgment despite the matter being subject matter of a court dispute at that time being heard by the Bombay High Court.

In its order, CCI had also directed NSE to put in place a system that would allow brokers a choice to select any software for trading, including ODIN, on the NSE platform.

According to the CCI, NSE’s conduct in refusing to share Application Programme Interface Code (APIC) with ODIN and putting Financial Technologies (FTIL) on watch list was an ‘exclusionary conduct’.

The APIC would allow the ODIN users to connect to the NSE trading platform through their preferred mode.

The dispute has now been settled by the two parties, NSE and FTIL, a promoter entity of MCX-SX, under which NSE has agreed to allow brokers to use FTIL’s ODIN software in currency derivatives market subject to certain conditions.

These conditions include FTIL agreeing to allow NSE to conduct inspection of the software to its satisfaction.

NSE said this vindicates its earlier position of barring FTIL on account of issues related to their software.

As per the settlement, NSE agreed to remove ‘FTIL-ODIN’ from its watch-list with immediate effect and “grant approvals in respect of new services/products of FTIL, subject to completion of pre-described requirements as agreed and FTIL shall co-operate with NSE for the same”.


Rajya Sabha approves Soumitra Sen’s impeachment

Justice Sen’s impeachment was the first in the Rajya Sabha, as he was found guilty of misappropriating Rs33.23 lakh, which was under his custody as a court-appointed receiver in the capacity as a lawyer and misrepresenting facts before a Calcutta court

New Delhi: Justice Soumitra Sen of the Calcutta High Court could go down in history as the first judge to be removed if Lok Sabha gives its consent next week to the motion for his impeachment, reports PTI.

With the Rajya Sabha (Upper House) approving with overwhelming majority of 189 votes in favour and 17 against, the issue is expected to come up in the Lower House on 24-25 August.

Mr Sen’s impeachment was the first in the Rajya Sabha, which was converted into a court, as he was found guilty of misappropriating Rs33.23 lakh, which were under his custody as a court-appointed receiver in the capacity as a lawyer and misrepresenting facts before a Calcutta court.

The first such case involved the impeachment motion in Lok Sabha of justice V Ramaswami of the Supreme Court in May 1993 which fell due to lack of numbers after Congress members abstained.

Incidentally, Union minister Kapil Sibal who was then a senior advocate, had presented the case of justice Ramaswami before the Lower House.

Justice PD Dinakaran, Chief Justice of the Sikkim High Court, against whom the Rajya Sabha chairman had set up a judicial panel to enquire into allegations of corruption, had resigned on 29th July this year, before an impeachment could be initiated against him.

Unlike Mr Ramaswami, Mr Sen presented his case personally backed by two lawyers.


Share prices to remain weak: Thursday Closing Report

Nifty’s range for tomorrow is 4,875 to 5,075

The market, which opened with marginal gains, shrugging off weakness in the global markets, ended lower on concerns of a slowdown in global economic growth. The Sensex fell 2.20%, which is the biggest one-day loss after 3 May 2011. The Nifty's intraday low of 4,932 is the maximum since 28 May 2010.

The market is in a volatile region where the Nifty's Friday's movement is based on the intraday move. If the Nifty is able to make an intraday high above 5,078 tomorrow, we can expect an upmove to the level of 5075. However, if it breaks today's low, we can expect it to fall to the level of 4,875.

Brushing aside the weakness in the Asian region, the domestic market opened in the positive today. The Nifty rose 21 points to resume trade at 5,078 and the Sensex opened at 16,910, up 69 points. Metal, auto, oil & gas and FMCG counters witnessed buying demand in initial trade, helping the benchmarks rise to their intraday highs. At the day's high, the Nifty rose to 5,079 and the Sensex touched 16,917.

However, the indices soon pared their gains and slipped into the negative as investors resorted to profit-booking on concerns about the pace of global growth. News that international finance major Morgan Stanley cut its global growth forecast for 2011 and 2012 pushed the market sharply lower in the mid-morning session. The slide continued through the post-noon session on a sharp decline in key European benchmarks.

The market fell to its intraday low in the closing half hour with the Nifty going down to 4,944 and the Sensex to 16,433. The market closed the session near the day's lows with the Nifty tanking 112 points at 4,944 and the Sensex settled at 16,470, down 371 points from yesterday's close.

The advance-decline ratio on the National Stock Exchange (NSE) was a poor 288:1387.

The broader indices were equally battered in today's market decline as the BSE Mid-cap index declining 2.05% and the BSE Small-cap index diving 2.62%.

All sectoral indices settled in the negative. The top losers were BSE IT (down 3.99%), BSE Bankex (down 3.51%), BSE TECk (down 3.15%), BSE Consumer Durables (down 2.55%) and BSE Metal (down 2.54%).

DLF (up 2.70%), Hero MotoCorp (up 0.67%), Hindustan Unilever (up 0.41%) and Jaiprakash Associates (up 0.26%) were the gainers on the Sensex. The top laggards on the index were ICICI Bank (down 5.03%), Wipro (down 4.72%), State Bank of India (down 4.47%), Sterlite Industries (down 4.28%) and TCS (down 4.23%).

The major gainers on the Nifty were DLF (up 3.02%), Reliance Communications (up 1%), JP Associates (up 0.78%), Hero MotoCorp (up 0.67%) and HUL (up 0.38%). The top losers on the benchmark were Reliance Infrastructure (down 7.44%), HCL Technologies (down 6.92%), Wipro (down 5.61%), Reliance Capital (down 5.57%) and IDFC (down 5.56%).

Most markets in Asia fell on global growth concerns and a weaker outlook for the technology sector following a disappointing outlook from Dell. The Chinese market fell on fears of another rate hike by the country's central bank.

The Shanghai Composite tanked 1.61%, the Hang Seng declined 1.34%, the Nikkei 225 slipped 1.25%, the Straits Times shed 0.13%, the Seoul Composite tumbled 1.70% and the Taiwan Weighted fell by 1.64%. Bucking the trend, the Jakarta Composite surged 1.71% and the KLSE Composite added 0.02%.

Back home, foreign institutional investors were net sellers of stocks worth Rs407.68 crore on Wednesday. On the other hand, domestic institutional investors were net buyers of shares worth Rs169.42 crore.

The government is likely to decide on the rights issue proposal of State Bank India in the next three months to fund its capital requirement for future business growth. The government would also examine other route of capital infusion like follow-on public offer, Qualified Institutional Placement (, etc, taking into view the second quarter provisional numbers. The bank requires as much as Rs30,000 crore capital over the next three years to fund its business growth without bringing down its Tier-I capital below 9%. The stock declined 4.53% to close at Rs2,072 on the NSE today.

Jet Airways, a private airline, is planning to increase domestic low-fare capacity to 80% of the total fleet from the present level of 72%. The airline may also launch more budget flights for short-haul international routes. Towards this end, the airline is considering the possibility of merging its low-fare service brands called Jet Konnect and JetLite. The stock skidded 3.79% to Rs293 on the NSE.

ITC, tobacco-to-foods giant, is likely to foray in the chewing gum market and take on multinational players like market leader Perfetti Van Melle and Wrigley's. ITC operates only in the sugar confectionery arena, which limits its size of business while Perfetti has varied products in the Rs4,000 crore confectionary businesses that include sugar confectionery (mints, candies, éclairs, etc) and gum. ITC closed at Rs203.80, down 0.22% on the NSE.


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