While closing the case, the regulator emphasised that its “findings reflect the views of the Commission purely from the standpoint of the provisions of the Competition Act, 2002 and may not be construed as expressing any opinion on merits, in any manner, in respect of other ongoing proceedings against NSE”.
It was alleged that the exchange abused its dominant position with respect to co-location facilities.
To assess the complaint, the Competition Commission of India (
) considered the ‘market for providing co-location services for Algo-trading in securities to the trading members in the territory of India’ as the relevant one.
In its 28-page order dated June 28, CCI also mentioned about markets regulator Sebi’s finding with respect to NSE’s co-location facilities.
“The Commission notes that in so far as the allegations have been made in respect of the of abuse of dominant position by NSE in provision of co-location facility, the same would be required to be examined within the four corners of the Act,” CCI noted.
Further, the regulator said that NSE vehemently contended that there is no abuse by it and that co-location facility is a worldwide accepted facility in the services provided by the stock exchanges. The exchange also sought to explain that it had not given any preference to any member nor allowed manipulation of its system.
“It also submitted that Sebi findings exonerate its conduct in many respects and that no fraud has been established on the part of NSE in provision of such services,” the exchange said in its submission to CCI, adding that Sebi’s findings with respect to violation of certain regulations have been challenged before the Securities Appellate Tribunal (SAT).
CCI noted that it tends to agree with the submission that if there has been a bonafide choice of a particular technology, coupled with the fact that the sector regulator has not observed any instance of fraudulent conduct in violation of Sebi (PFUTP) Regulations in the provision of the co-location facility which has been the mainstay of the allegations against NSE, then it ought not to be found in contravention of Section 4 of the Competition Act, in the facts and circumstances of the present case.
Section 4 pertains to abuse of dominant position.
Regarding the allegations of co-location facility in itself being anti-competitive, CCI said that it cannot be oblivious to the strides being taken by technology in all walks of life, leave alone the financial field.
A robust exchange acts as a backbone of the financial system and the provision of co-location facility by exchanges help increase volumes of trades manifold and provides liquidity to investors. This augurs well for the market, the companies and the economy, the regulator added.
CCI concluded that there is no prima facie case of violation by the exchange under the Competition Act.
