In a June 2011, the CCI had, on a complaint by rival MCX-SX, held that the NSE had violated trade practices and abused its dominant market position by indulging in "predatory pricing" when it stopped charging fees for trading in currency-derivates contract.
The Competition Appellate Tribunal (Compat) today upheld a 2011 order by the Competition Commission of India (CCI) against the country's top bourse, the National Stock Exchange (NSE), with respect to its currency-derivatives pricing strategy.
In a June 2011, the CCI had, on a complaint by rival MCX-SX, held that the NSE had violated trade practices and abused its dominant market position by indulging in "predatory pricing" when it stopped charging fees for trading in currency-derivates contract.
The competition watchdog had also slapped a Rs 55-crore penalty against NSE.
But after issuing a stay on the original order, the Compat today agreed with the CCI's view that NSE's strategy was an abuse of its dominant market position.
The NSE had leapt past the its older rival BSE in the 2000s in both the cash and derivatives segment, with its market share at one point touch north of 90 percent.
But the upstart MCX-SX, backed by commodities exchange powerhouse MCX , had thrown a challenge to India's largest exchange after it entered the currency derivatives market, and later stock and stock-derivatives trading.
"In 2008, MCX-SX launched trading in the currency derivatives segment and from inception had been unable to charge transaction fees and other fees on account of free offering by NSE," MCX-SX said in a statement.
"A year later, in November 2009, MCX-SX filed a complaint in CCI against NSE for using its dominant position to engage in predatory pricing in the currency derivatives segment."
After two years of investigation and inquiry, the CCI passed an order via majority finding NSE guilty of contravention of section 4 of the Competition Act, 2002.
"We welcome the order passed by COMPAT upholding the CCI order. We believe that healthy competition is always in the interest of overall development of Indian financial markets," MCX-SX MD and CEO Saurabh Sarkar said.
NSE, on its part, maintains that it would appeal the order and that "whatever it has done was in the interest of the development of the capital markets".
MCX India stock price
On August 05, 2014, Multi Commodity Exchange of India closed at Rs 803.20, up Rs 39.40, or 5.16 percent. The 52-week high of the share was Rs 895.00 and the 52-week low was Rs 238.30.
The company's trailing 12-month (TTM) EPS was at Rs 29.95 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 26.82. The latest book value of the company is Rs 256.77 per share. At current value, the price-to-book value of the company is 3.13.
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