MCX dips 9% as SEBI puts Commodity Derivatives Platform in ‘abeyance’

Shares of the country's largest commodity derivatives exchange Multi Commodity Exchange of India (MCX) plunged as low as 8.8% today after the capital markets regulator SEBI (Securities and Exchange Board of India) put the launch of a new Commodity Derivatives Platform (CDP) in abeyance.

MCX had earlier announced that the exchange will go live with the new Commodity Derivatives Platform with effect from Tuesday, October 03, 2023.

The smallcap stock opened a gap down at ₹1,967, a 6.34% drop compared to the previous close of ₹2,100.35 on the BSE. Amid the development, the MCX stock fell to an intra-day low of ₹1914.6, 8.8% down as compared to the last session close but later recovered a bit to settle at ₹ 2064.55. At the current share price, the m-cap of the company stands at ₹10,550.03 crore.

The stock had achieved an all-time high of ₹2,119.6 on September 28, 2023. It gained 14.5% in the past week; 28.03% in the past month; and has given a 37.32% return in the past six months. In the year-to-date and one-year period, the MCX stock has seen 37.61% and 41.59% jump, respectively. The shares of MCX are currently trading higher than the 5-day, 30-day, 150-day, and 200-day moving averages.

MCX informing stock exchanges says it's ready and keen to go live as soon as permitted. It says it'll continue to conduct CDP mock tests pending further directions in the matter from SEBI.

"SEBI has vide email dated September 28, 2023, forwarded a copy of the letter dated September 27, 2023 from Chennai Financial Markets and Accountability (CFMA) regarding CDP. It may be noted that writ petitions filed by CFMA on CDP are pending before the Hon’ble Madras High Court for disposal," says MCX.

The regulator says the matter involves technical issues, and it'll be discussed in the SEBI Technical Advisory Committee meeting to be held shortly. "Meanwhile, SEBI has advised the Exchange to keep the proposed Go-Live of CDP in abeyance."

MCX is the leading commodity derivatives exchange in India with a market share of about 96.7% in terms of the value of commodity futures contracts traded in FY22-23.

In October 2020, MCX announced the development of the Exchange’s Commodity Derivatives Platform (CDP), and TCS was selected as the vendor to help it build a new technology core, transforming its trading as well as post-trade functions. In June 2023, MCX extended a software support deal with 63 Moons Technologies due to further delay in the delivery of the trading software by TCS.

For the year ending March 31, 2023, MCX' total income stood at ₹581 crore, up 34% YoY, while EBITDA and net profit were at ₹217 crore (margin at 37%) and ₹149 crore, (margin at 26%), respectively.