Dissent note in hand, NSE plans reply to CCI by Friday

The National Stock Exchange (NSE) is set to respond to the order passed against it by the Competition Commission of India (CCI) on April 29, holding it guilty of abusing its dominant position in the currency derivatives segment.

The reply, expected by Friday, is likely to draw liberally from a dissent note to the order signed by two of the seven members of the commission, sources said.

The 65-page dissent note expresses an opinion different from the majority of members, who signed an order holding the exchange guilty of anti-competitive practices. The two dissenting members, Geeta Gouri and Anurag Goel, noted that the NSE is not guilty of predatory pricing or of abusing its dominant position in the stock exchange space.

DNA was unable to get in touch with the CCI, which seeks to prevent monopolistic practices from affecting competition, for comments.

MCX-SX, another exchange, had complained that NSE’s decision to provide services in the currency derivatives segment for free amounted to misuse of its position.

The NSE had asked that it be provided a portion of the order containing the opinions of members who did not agree with the findings of the majority. The CCI provided the same to the NSE on June 3, giving the exchange till Friday to reply to the majority view.

The dissenting order, a copy of which is with DNA Money, notes that NSE did not employ predatory pricing as two other exchanges could enter the space and wrest market share. “MCX-SX and USE (United Stock Exchange) have been able to take away original market share from NSE at the same price... indicates that the enterprises are competing on non-price parameters.”

In May 2011, MCX-SX and NSE enjoyed close to 40% volumes each with the remaining volumes with the USE.

NSE’s share has come down from 100% in October 2008 when it was the sole exchange for currency derivatives.