Armed with a favourable anti-competition ruling against the National Stock Exchange (NSE), MCX-SX is planning to claim an estimated Rs 400-500 crore for costs and damages suffered by it due to its larger rival's "predatory" practices.
The Competition Commission of India (CCI) has imposed a penalty of Rs 55.5 crore on the NSE after finding the bourse guilty of abusing its dominant market position.
The order followed a months-long CCI probe into the matter, which had begun after a complaint from MCX-SX.
Commenting on the order, MCX Stock Exchange's CEO and MD Joseph Massey said that the exchange would claim compensation, but did not quantify its losses or damages.
However, the sources said that the claims from MCX-SX could be estimated at about Rs 450-500 crore, including about Rs 150 crore of losses suffered by the exchange in currency derivatives business due to NSE's predatory pricing.
Besides the business loss of about Rs 150 crore, MCX-SX would claim damages and losses for opportunity costs, legal costs and other matters from NSE, sources said.
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These claims would be independent of the Rs 55.5 crore penalty imposed by CCI, for which a demand notice has already been issued by the commission along with the penalty order.
"Our next course will be to claim compensation for the losses and damages that we have incurred till now due to predatory pricing," Massey said.
The CCI order, passed last evening and uploaded by its website this afternoon, said that NSE was found to have abused its dominant market position through unfair pricing of services.
Welcoming the order, Massey said that the order would "safeguard new entrants and ensure innovators are not decimated by existing entities which have deep pockets and are more powerful".
"CCI penalising NSE and holding it guilty of anti-competitive and predatory practices vindicate our long-standing belief that monopolistic practices, especially those monopolies controlled by foreign and private entities, restrict fair competition and constrict innovation in any industry.
"This only leads to non-inclusive development of the market and is detrimental to the interests of common investors and consumers," he added.
The CCI said that its probe found "a clear intention on the part of NSE to eliminate competitors in the relevant market [currency derivatives]."
It also said that NSE intended to acquire a dominant position in the CD segment by cross subsidising this segment of business from the other segments where it enjoyed virtual monopoly.
"It also camouflaged its intentions by not maintaining separate accounts for the CD segments. NSE created a facade of the nascency of market for not charging any fees on account of transactions in the CD segment.
"The competitors with small pockets would be thrown out of the market as they follow the zero transaction cost method adopted by NSE and therefore in the long run they will incur huge losses.
"The past conduct of NSE and the conduct in the CD segment shows a longing for dominance in any segments in which the NSE operated by dominating its competitors," CCI said in its 170-page order.
The exchange was asked by the CCI to immediately cease and desist from unfair pricing, exclusionary conduct and unfairly using its dominant position in other markets to protect the relevant CD market.
Besides, NSE was also asked to maintain separate accounts for each segment from next financial year and modify its zero price policy in the CD market and levy appropriate transaction costs within 60 days.