Mkt regulator Sebi puts MCX's impending transition to new CDP in abeyance

The exchange was scheduled to go live with the new tech platform on October 3

India’s largest commodity derivative exchange Multi-Commodity Exchange (MCX) on Friday informed investors that the market regulator had placed its impending transition to a new Commodity Derivatives Platform (CDP) in abeyance.

In a letter dated September 28, the Securities and Exchange Board of India (Sebi) advised the exchange to keep the plans of going live with the new CDP in abeyance.

Sebi’s decision followed a letter received from the Chennai Financial Markets and Accountability (CFMA) on the proposed transition. CFMA had filed writ petitions on CDS and the same is pending for disposal before the Madras High Court.

MCX had planned to go live with CDP on October 3.

“The regulator has informed that since the matter involves technical issues, the same would be discussed in the Sebi Technical Advisory Committee meeting, which would be held shortly,” said MCX in an exchange filing.

The bourse added that it was ready and keen to go live following the permissions and that it will continue to conduct CDP mock tests pending further directions from Sebi.

MCX had conducted mock trading sessions for 14 hours for 7 days without any glitches.

The plans being kept in abeyance eroded all the gains made in the share prices a day before following the announcements. At 9:53 am, the shares of MCX were trading at Rs 1926.2 apiece, 8 per cent down from the previous day’s close.

Following the announcement, HDFC Securities had maintained Buy on the stock with a target price of Rs 2,400—as of September 28.

“MCX profitability was impacted by the higher payout of Rs 1.4/3.3bn to the technology vendor in FY23/24E, leading to a drop in EBITDA margin (26/17 per cent in FY23/24E vs nearly 45 per cent average). The shift to the new platform will pivot the cost structure to a higher fixed-cost model. The total cost will decline by 51 per cent in FY25E due to a significant reduction in software support charges,” the brokerage pointed out.