MCX Shares Plunge After SEBI’s CDP Launch Caution

MCX Shares Plunge After SEBI's CDP Launch Caution. Image/Reuters

VoM News Desk | September 29, 2023 | 12:17 PM IST | Breaking News | Follow on Google News

MCX Shares Plunge After SEBI’s CDP Launch Caution

MCX Shares Plunge After SEBI’s CDP Launch Caution

The Multi Commodity Exchange (MCX) encountered heavy selling pressure during the early morning trading session following a caution from the Securities and Exchange Board of India (SEBI) regarding the launch of its Commodity Derivative Platform (CDP). The stock, which has a monopoly position, opened lower at ₹1,970 per share in the morning session, quickly plummeting to an intraday low of ₹1,913.25 per share. This decline represented a nearly 9% drop from the previous day’s close of ₹2,096.55.

MCX’s Recent Record High and CDP Launch Plans

Just a day prior, MCX shares had reached a new all-time high of ₹2,114.40 per share on the National Stock Exchange (NSE). This surge was fueled by MCX’s announcement of its plan to launch the Commodity Derivative Platform on October 3, 2023, with a mock session scheduled for October 2, 2023. However, the optimism was short-lived, as SEBI intervened on Friday morning, requesting MCX to postpone the CDP launch due to a perceived “technical issue.”

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SEBI’s Directive and MCX’s Response

In response to SEBI’s directive, MCX stated, “Pursuant to Regulation 30 read with Schedule III of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, please be informed that 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. 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. Meanwhile, SEBI has advised the Exchange to keep the proposed Go-Live of CDP in abeyance.”

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Despite SEBI’s directive, MCX indicated its intent to proceed with the mock sessions through the Tata Consultancy Services (TCS)-serviced platform.

Renewal of Agreement with 63 Moons

This episode is not the first instance of MCX grappling with the implementation of a new technology platform. Previous attempts were hindered by technical issues, leading to the renewal of their agreement with 63 Moons in June of this year. This renewal extended MCX’s access to the platform until December 2023, at a quarterly cost of ₹125 crore, amounting to ₹250 crore for the July-December 2023 period.

VoM News Desk

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