CCI closes case alleging NSE of abusing its dominant position

UPSE Securities had alleged that NSE imposed "excessive and discriminatory deposit structure" for its membership

The Competition Commission has rejected a complaint against country's leading bourse National Stock Exchange, alleging abuse of dominant position in the securities market.

UPSE Securities, a subsidiary of UP Stock Exchange, had alleged that NSE imposed "excessive and discriminatory deposit structure" for its membership.

In an order dated February 19, the fair trade regulator has said that there is no prima facie case against the bourse.

"The case deserves to be closed...And is accordingly hereby closed," CCI said.

The regulator observed that the conditions imposed by NSE on Regional Stock Exchange (RSE) members "were necessary for investor's protection".

"Transactions between opposite party (NSE) and ordinary corporate members on one hand, and between opposite party and RSE members on the other were therefore not comparable," CCI said.

Besides higher deposit amount, UPSE had alleged NSE of other discriminatory and stringent conditions on subsidiaries of RSE.

It had alleged that subsidiaries could not do business in their own name/account, while other corporate members can do share trading on their own account.

Also, the dual membership of sub-brokers of subsidiary requires base minimum capital at the level of RSE and subsidiary, whereas in case of a sub-broker of other corporate members, deposit of minimum base capital is not required, the complaint alleged among other things.

In its complaint, UPSE has said that since NSE's launch in 1994, the turnover of the RSEs (including UPSE) started eroding which adversely affected their operations.

In 1999, the Securities and Exchange Board of India (Sebi) envisaged a route to rescue the RSEs wherein the RSEs were required to form a subsidiary company.

This subsidiary was permitted to acquire membership of stock exchanges such as NSE and the members of RSE could obtain sub-brokership of the subsidiary company and could trade there.

UPSE said it was formed in the year 2000 and obtained membership of NSE in 2009 by paying a deposit of Rs 2.71 crore to enable the members of UPSE to trade on the platform of the stock exchange as sub brokers.