The Rs 856-crore claim by Metropolitan Stock Exchange of India (MSEI) against National Stock Exchange (NSE) is scheduled for hearing by the National Company Law Appellate Tribunal (NCLAT) on 10 October 2017. MSEI had dragged NSE to the Competition Commission of India (CCI) citing monopolistic practices. The competition watchdog held NSE guilty and asked it to compensate MSEI.
Metropolitan Stock Exchange of India (MSEI), India’s new stock exchange, is recognised by Securities & Exchange Board of India. It is India’s third functional and recognised stock exchange after BSE and NSE. There is huge demand for shares of MSEI due to strong listing of BSE and upcoming IPO of NSE. A clutch of financial institutions now own more than 34% of MSEI, as do investors including Rakesh Jhunjhunwala, Radhakishan Damani and Nemish Shah.
In 2008, both MSEI and NSE launched currency future contracts almost simultaneously. NSE priced the transaction charges on these contracts at zero and given NSE’s dominant position, MSEI was left with no choice but to adopt zero pricing as well.
This made a significant and material dent in the financial position of MSEI, which filed a complaint with CCI alleging predatory pricing (waiver of transaction fees, data-feed fees and admission fees) wherein CCI found NSE guilty and imposed a fine of Rs 55.5 crore. NSE filed an appeal with the Competition Appellate Tribunal (COMPAT), which too found NSE guilty. NSE then moved the Supreme Court and its appeal is still pending.
According to the process, the exchange has filed an application for award of compensation against NSE for Rs 856 crore before COMPAT, pending the appeal. Now, as COMPAT ceased to exist (from May 26), all pending matters before COMPAT stand transferred to the NCLAT.
Udai Kumar, MD & CEO of MSEI,said, “MSEI started out as a fast-growing exchange with immense potential, when it was deeply impacted by the financial burden imposed by NSE’s predatory pricing. Speedy disposal of this matter is the need of the hour. “It will encourage transparency and compliance with existing competition laws and practices across the spectrum and also dis-incentivise anti-competitive practises and misuse of dominant position.”
The Metropolitan Stock Exchange of India (MSEI) plans to woo brokerages to execute large stock trades on its venue. The exchange is also developing short-term debt instruments to help mutual funds and insurance companies hedge their portfolios. Products launches in currency, interest rate futures and corporate bonds are also planned.
Backed by billionaires Rakesh Jhunjhunwala and Radhakishan Damani, MSEI aims to wade into the block deals segment, which is worth as much as Rs 5 trillion ($78 billion). India’s regulator defines a block as a single trade having at least 500,000 shares or a minimum value of Rs 5 crore. Money managers like dealing in large sizes because it ensures transactions are done before the market can hear about them and react by raising or lowering prices.
We are telling institutional investors to come to our platform—there will be no slippages or price impact, said Kumar, who was named chief executive officer last year to turn around the bourse. The MSEI is in talks with half a dozen large investment banks to bring in such deals, he said.
The MSEI, which has been making losses, expects to return to profitability by March 2020. We can lead in areas where the BSE and NSE have limited play, Kumar said.
A clutch of financial institutions now own more than 34% of MSEI, as do investors including Jhunjhunwala, Damani and Nemish Shah.
The MSEI got 250 companies to list exclusively on its venue—most of whom migrated from the 15 regional bourses the market regulator shut down three years ago—and slashed fees and transaction costs to levels it claims are the lowest in the country.
Metropolitan Stock Exchange of India (MSEI), India’s new stock exchange, is recognised by Securities & Exchange Board of India. It is India’s third functional and recognised stock exchange after BSE and NSE. There is huge demand for shares of MSEI due to strong listing of BSE and upcoming IPO of NSE.
The Metropolitan Stock Exchange of India (MSEI) plans to launch an initial public offering (IPO) in the next two years, following in the footsteps of larger peers, the Bombay Stock Exchange and National Stock Exchange.
The exchange is looking to turn profitable in the next two years, and it plans to go public at the end of this turnaround period, said the chief operating officer Abhijit Chakraborty during an event on 12 July 2017. The exchange, formerly known as MCX-SX, currently has a net worth of around Rs 160 crore, cash liquidity of about Rs 60 crore and operating costs at just below Rs 30 crore, said Chakraborty.
MSEI plans to launch two new derivative products in the currency segment, one new interest rate futures (IRF) product and two new equity indices linked to derivative contracts by next year. India’s third national-level stock exchange has been operational since 31 December 2012. More than 1,500 stocks are traded on the MSEI currently.
MSEI, India’s new stock exchange, is recognised by Securities & Exchange Board of India. It is India’s third functional and recognised stock exchange after BSE and NSE. There is huge demand for shares of MSEI due to strong listing of BSE and upcoming IPO of NSE. A clutch of financial institutions now own more than 34% of MSEI, as do investors including Rakesh Jhunjhunwala, Radhakishan Damani and Nemish Shah.
Metropolitan Stock Exchange of India (MSEI) is soon set to submit an independent report in support of its claim seeking Rs 856 crore as compensation from National Stock Exchange (NSE) at the Competition Appellate Tribunal (Compat).
The nine-year old tussle relates to MSEI’s complaint against the NSE alleging abuse of its dominant position and predatory pricing in the currency derivatives segment.
MSEI, earlier known as MCX Stock Exchange (MCX-SX), is required by law to file an independent report by a chartered accountant validating the claims and the calculations based on which it had sought compensation. Incidentally, MSEI filed its compensation application in February 2015.
The dispute dates back to October 2008 when MCX-SX started offering trading in currency futures. Its larger counterpart, NSE, was already offering currency futures trading and was not levying any charges in the segment. This forced MCX-SX to offer currency futures trading for free.
In 2009, MSEI filed a complaint against NSE at the Competition Commission of India (CCI) alleging that the zero-pricing strategy was an abuse of market dominance. NSE, it claimed, was cross-subsidising losses in the currency segment from profits in other segments like equity and equity derivatives.
In June 2011, CCI ruled in favour of MSEI and levied a penalty of Rs 55.5 crore on the NSE which challenged the ruling at Compat and then at the Supreme Court, which granted an interim stay on the penalty. Meanwhile, NSE started levying charges in the currency segment from August 2011.
Our Coverage in Economic Times newspaper in Pg No 8 on 21 April 2017 on listing of shares of Dollar Industries on NSE.
“The stock is expected to benefit from the consumption boom and good brand,” says Narottam Dharawat, a Mumbai-based broker, who deals in unlisted shares.
Dollar Industries has been sold at Rs 700-800 range by us when it was unlisted. Later on the company gave 1:2 bonus shares. There is no lock-in in this shares. So these shares can be sold on very first day also once trading begins. The stock was trading above Rs 1,500 on 27 April 2017.
Shares of Dollar Industries’ rival Lux Industries were sold from Rs 100 and it went to hit Rs 4,000. Giving 40x (40-bagger) returns to investors in just three years.