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Informist, Tuesday, May 26, 2026

 

NEW DELHI – The Supreme Court Tuesday upheld the Competition Commission of India's order refusing a direct probe against the National Stock Exchange of India on allegations that the exchange was involved in ant-competitive practices of granting preferential market access to select brokers through co-location facilities. A bench of Justice J.B. Pardiwala and Justice Vijay Bishnoi said they found no grounds to interfere with the National Company Law Appellate Tribunal's February order that had upheld the Competition Commission of India's rejection of a probe against NSE.

 

The case has its genesis in a complaint filed by Manoj K. Sheth, alleging that NSE had disadvantaged the rest of the market through front-running, artificial information asymmetry, and market manipulation on a consistent basis. The co-location facility permitted select brokers to locate trading systems within NSE premises, enabling access to granular 'tick-by-tick' data, including orders, cancellations, modifications, prices, and trades, ahead of other market participants, benefiting such brokers with lower latency and faster execution, distorting market competition, said Sheth.

 

The NSE's practices in relation to these facilities violated the Competition Act, as the exchange being a dominant enterprise in the securities market, granted unfair preferential access to select trading members, limiting and restricting services to others, resulting in denial of equal market access and elimination of competition among participants, said the complainant. The NSE holds a "dominant position" in the relevant market, evidenced by its substantial market share, consumer dependence, and high regulatory entry barriers for new stock exchanges, rendering its preferential treatment exploitative, exclusionary  and discriminatory, warranting investigation under the Competition Act, said the complainant.

 

The NSE said the competition regulator had independently examined the entire record, applied its mind to the issues raised, and recorded a reasoned finding that no prima facie contravention of the Competition Act was disclosed. The antitrust regulator expressly recognised that co-location services, which have been operational for over 12 years and are offered by multiple stock exchanges in India, help increase trading volumes, enhance liquidity and benefit investors, said the exchange. The competition body has categorically observed that any intervention to stop such services at this stage would be retrograde and adverse to the interests of the market, companies and the economy, it said.

 

The appellate tribunal held that the complainant could not make any concrete case as to what harm co-location facilities or even the access to secondary servers caused to investors or consumers. It might be reiterated that co-location facilities were exclusively meant for trading members of the NSE and not for investors, the appellate tribunal said. Challenging the appellate tribunal's order, Sheth had moved the apex court.  End

 

Reported by Surya Tripathi

Edited by Avishek Dutta

 

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