MSEI, NSE in talks for out-of-court settlement, MSEI in urgent need of money

More than a decade after winning a legal claim of ₹856 crore against the National Stock Exchange (NSE) at the Competition Commission of India (CCI), the Metropolitan Stock Exchange of India (MSEI) is now seeking an out-of-court settlement into the matter, sources told BusinessLine.

On a complaint from MSEI, the CCI, in 2011, held the NSE guilty of predatory pricing and monopolistic practices. But NSE challenged the CCI order in the Supreme Court (SC) and the final outcome of the award to MSEI has been pending since.

Now, MSEI is now desperate for cash since its net worth is fast depleting and its licence may be cancelled by market regulator SEBI next year if the net worth of the exchange falls below ₹100 crore. As per SEBI rule, exchanges have to maintain a net worth of ₹100 crore all the time. In terms of business, MSEI has not been able to do much mainly as its management remained embroiled in controversies.

Also, the exchange has so far failed in efforts to convince the SC to give it an urgent hearing into the matter since it was on the death bed. SEBI has disallowed MSEI to claim available tax credits as net worth and also disallowed the exchange from reacquiring the cash lying in the books of its clearing and settlement arm, the sources said.

As of March this year, MSEI enjoyed a net worth of ₹165 crore, which dropped to ₹158 crore for the June quarter. In the filings of September quarter results, MSEI said that its net worth was still above ₹100 crore. While it has suffered a loss of around ₹8.31 crore for half year FY (Financial Year) 2022 as per its unaudited results. As of June quarter, MSEI’s loss stood at ₹6.7 crore. The net loss for the financial year ended March 2021 was ₹24.03 crore. MSEI and NSE did not reply to an email on the settlement talks.