CCI to issue 'cease and desist' order against NSE

“The Competition Commission will serve the final order to NSE by June 2-3 under Section 27 of the Competition Act 2002,” sources close to the development told PTI. The CCI, on Wednesday, pronounced NSE guilty of abusing its dominant market position and adopting unfair trade practices in currency derivatives trading.

Sources said that under Section 27, the CCI can issue ‘cease and desist’ order to refrain the company from pursuing any anti-competitive practices.

“Under the order, NSE will have to stop subsidising its currency derivative operations.” they added.

The CCI’s final order will be issued after NSE files a reply to the show cause notice. Based on the response, the CCI will decide on the quantum of fine to be imposed on NSE.

MCX-SX, promoted by commodity exchange MCX and Financial Technologies, had alleged before the CCI that NSE substantially reduced admission and trade related fees to eliminate competition and discourage other entities from entering the market.

The CCI’s yesterday’s order said, “... it can be said that the two relevant markets (currency and non-currency derivatives segments) have associational links. Therefore, it is concluded that NSE has used its position of strength in the non CD segment to protect its position in the CD segment.”

An investigation report of the CCI director general had found NSE used its dominant position and original monopoly in equity, F&O (Future and Options) and WDM (Wholesale Debt Market) markets to protect its position in the currency derivative (CD) market.

MCX-SX had argued that all market segments such as equity and currency derivatives are related while NSE had argued that these different segments are actually different markets.

CCI is believed to have gone by NSE’s view on this issue by concurring that segments like equity and currency derivatives may be related but are different markets.

In the recent past, MCX-SX has been leading over NSE in currency derivative segment although NSE has a dominant position in the overall market.

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