Financial Technologies-MCX and NSE become friends again

Financial Technologies (India) scored a key victory in its battle with the National Stock Exchange, its second one after it earlier got a favourable order from the Competition Commission of India. The company today announced a settlement of a case it had filed against the National Stock Exchange of India in the Bombay High Court.

According to the consent terms filed with the court, Financial Technologies and the NSE have settled all their disputes. Financial Technologies’ ODIN software will be removed from an NSE watch-list. The exchange had put the software on a watch-list saying that it had received complaints from trading members and that the software had bugs in it.

NSE will also give Financial Technologies the application protocol interface for the currency segment. It had denied FT’s request for this API, which would enable it to integrate this in the trading software used by its subscribers who are also members of the NSE.

Financial Technologies said that NSE shall give approvals for new services and products “subject to the completion of pre-described requirements as agreed and FTIL shall co-operate with NSE for the same.” It is not clear what these pre-described requirements are and whether these were any substantial requirements which NSE required Financial Technologies to be compliant with.

The two parties have had a fall-out over several issues, which is widely believed as a result of Financial Technologies’ successful entry into the exchange business, with a commodity and currency exchange under the MCX and MCX-SX brands, and a stock exchange which is waiting in the wings. This is said to have sparked off the animosity between the two, especially as its fast growth could threaten NSE’s hold in the business.

The MCX Stock Exchange had complained to the Competition Commission of India that the NSE had waived off various fees in the currency derivatives market and kept membership deposits low, which was affecting the business of MCX. The commission ruled in its favour.

The current settlement will boost Financial Technologies’ business, it would appear, benefiting both its business and image. At another level, it is also facing obstacles in its bid to operate a stock exchange, as the Securities Exchange and Board of India –the capital market regulator- is not clearing its application for starting operations.

The chief concerns were to do with its ownership structure, which the capital market regulator apparently believed does not conform to the spirit, in which the regulations governing stock exchange ownership were written.

Read the order from the CCI here.

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