New Delhi: Competition watchdog CCI on Wednesday found the National Stock Exchange (NSE) guilty of misusing its dominant market position and adopting unfair trade practices in currency derivatives trading.

The Competition Commission of India (CCI) order said, "... it can be said that the two relevant markets 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."

Seeking reply from the bourse of its notice in a week, The CCI is yet to decide on the quantum of penalty to be levied 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.

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.

After consideration of the report and hearing both parties, the CCI finally passed its order.

When contacted, NSE said it cannot comment on "any ongoing or subjudice matter".

MCX-SX, however, said, "While we are still examining the full purport of the CCI order, we have always believed in our judicial system and that truth shall prevail. With the CCI order today, we stand vindicated."

"We will continue to stand for the truth to create a conducive, free, fair and level-playing market at large in the interest of millions of investors, consumers and ecosystem."

Notice before decision

Meanwhile, CCI has sent a show-cause notice to NSE before taking a decision on the quantum of fine to be slapped on it.     

Under the law, companies can be fined up to 10 per cent of their three-year average profit for violating section 4 of the Competition Act, pertaining to abuse of dominant position.

Earlier, NSE had challenged in the Delhi High Court a penalty notice issued by CCI in this regard.

During the full-year ended March 31, 2011, the currency derivative contracts traded on the MCX-SX were worth over Rs 90.31 crore, while that of NSE was nearly Rs 75 crore, as per
data available with the market regulator Sebi.