MCX to appoint auditor for IT policy administration

This, after allegations against NSE for preferring some brokers over other market participants

The Multi Commodity Exchange (MCX) will appoint an independent auditor for its policy administration on information technology (IT).

Its board of directors recently decided so, as a ‘good governance practice,’ said a source in the know. This follows some allegations by an unknown party against the National Stock Exchange for preferring some brokers over other market participants on speedy trade execution. While NSE is allowed to offer co-location facilities to brokers for faster access, similar facilities are not allowed to commodity exchanges. After NSE-like allegations were made against MCX, the exchange’s “now fiercely independent Board advised the management to volunteer to carry out a validation (audit) by a third party (any reputed technology service audit firm of repute) of the exchange’s policy administration on the IT side, related to network connectivity”, said the source quoted earlier.

The bourse has told the Securities and Exchange Board of India about its decision and is now inviting a formal Request for Proposal from outside entities for such an audit. When asked, the company's spokesperson declined to comment.

According to a posting on the MCX website, the speed for any connection to the exchange’s server is capped at the specified maximum, 45 mbps. Brokers and participants decide to go for a speed they find viable. A broker might give a higher speed benefit to some but from broker to the exchange’s server, the speed limit will be capped at a specified level. If that is so, the source explained, “there is no dark fibre that is possible in the current architecture”.