COMPAT rejects NSE plea in currency derivatives case

The Competition Appellate Tribunal (COMPAT) today declined to grant National Stock Exchange (NSE) interim relief in a market monopoly case.

The Competition Commission of India (CCI) had directed NSE to maintain separate segment wise financial records for equity, currency derivatives and so on. This was after another stock exchange MCX-SX approached CCI against NSE and the latter was found gulity of monopolistic practices.

However, NSE had pleaded against this with COMPAT but the appeal was rejected.

Rejecting NSE's appeal, COMPAT observed that the CCI order was in accordance with competition law of India. NSE had contended that on March 15 that maintaining separate segment account would entail cost and would be time consuming to implement. NSE has also stated that such a thing was not required under accounting standards – AS (17) provisions.

COMPAT observed that NSE had made the fresh appeal against CCI’s order to maintain separate accounts “at the last juncture", though they had ample opportunity to contest the order in competent bodies.

"Thus, if NSE is granted any interim relief now to maintain separate accounts, then the direction would automatically be pushed to the next financial year – that is from April 2013," COMPAT said.

NSE will have to start seperate segment reporting from April 1.

Although, COMPAT said that it was not the competent body to decided on regulatory issues like compliance of accounting standards but its order could certainly hold NSE accountable for averments under AS (17) and also the undertakings made by NSE with CCI to comply with the directions of CCI within the stipulated deadlines.

Sources close to NSE said they will seek legal opinion on the issue.

Earlier, COMPAT had granted stay on CCI order, which imposed a penalty of Rs 55.5 crore on NSE. But the tribunal had upheld other part of CCI report, which directed NSE to cease and desist from abusing its dominant position, maintaining separate accounts, adopt a pricing policy.

The CCI report had asked NSE to also maintain a separate clearing corporation of currency derivative segment.