Mumbai: Through a number of innovations, the National Stock Exchange (NSE) was able to break the monopoly of the Bombay Stock Exchange (BSE) in Indian equities in the 1990s, and spread the habit of investing across the nation to become the dominant force in capital markets in the post-liberalization era. Despite this recent but rich legacy, NSE has seen its credibility being eroded marginally on a number of fronts with rivals accusing it of monopolistic behaviour.
The biggest blow was dealt by the Competition Commission of India (CCI), which found it guilty of abuse of dominant power, though two members in the seven-member panel dissented. CCI’s investigation came after rival bourse MCX-SX filed a complaint with the competition watchdog, alleging that NSE’s practice of waiving fees in the currency derivatives segment amounted to predatory pricing.
According to CCI, NSE’s denial of access codes to users of a software platform sold by Financial Technologies (India) Ltd, or FTIL, is unfair and a contravention of India’s competition law.
MCX-SX’s promoter FTIL is the dominant software service provider for brokers in the country, with an 85% market share, and the case between FTIL and NSE now rests in the Bombay high court.
NSE has also come under the scrutiny of the tax department for under-recovery of securities transaction tax, ‘The Economic Times’ had reported in February.
NSE has also come under fire from BSE for not allowing multi-exchange algorithms, deliberately imposing restrictive conditions on smart order routing that were later overruled by the Securities and Exchange Board of India, and delaying changes that could have potentially benefited BSE.
An NSE spokesperson declined comment on these issues.