Jignesh Shah-promoted Financial Technologies India Ltd (FTIL) and the National Stock Exchange (NSE) have finally settled a dispute, wherein a software developed by the former had been under ‘watch list’ by India's leading equity bourse. NSE has now agreed for the software to be used in the currency segment.
In 2009, NSE had denied permission for a software developed by FTIL for currency futures and kept the company under 'watch list'. FTIL reacted by slapping a legal notice on NSE for keeping its product under ‘watch list’. FTIL happens to be the technology vendor whose software has been allowed by NSE for trading in equity, cash and futures and options for a decade.
As the battle reached the Bombay High Court, it was alleged that since MCX-SX, which is co-promoted by FTIL, is a competitor of NSE in currency futures, NSE did not allow the software to be used by its members in the currency segment. NSE instead authorised Omnesys Technologies for providing software for currency futures. NSE has a 26 per cent stake in Omnesys.
In a stock exchange announcement on Thursday, FTIL said that it has settled the case with NSE by filing consent terms. According to the settlement terms, NSE will remove FTIL-ODIN from the 'watch-list' with immediate effect. Further, NSE will give FTIL, application protocol interface for the currency segment. NSE will also grant approvals in respect of new services/products of FTIL, subject to completion of pre-described requirements as agreed and FTIL will co-operate with NSE.
Interestingly, this is just one of the many issues that have brought Jignesh Shah face-to-face with India's largest equity exchange that enjoys near monopoly in the equity derivatives segment.
Recently, MCX-SX managed to get a favourable ruling by the Competition Commission of India (CCI) after it filed a petition alleging that NSE was using unfair pricing in its currency futures segment due to its dominant market position. CCI imposed a penalty of Rs 55.5 crore on NSE and directed it to "cease and desist" from such practices. NSE, on its part, plans to challenge the commission ruling at the tribunal.
MCX-SX has also alleged that the Securities and Exchange Board of India (Sebi) has been favouring NSE by not allowing it (MCX-SX) to operate as a full-fledged stock exchange. MCX-SX currently offers trading facility only in currency futures. The case will come up for hearing on August 9.
