MCX shares drop on platform launch delay

Mumbai: Shares of the Multi-Commodity Exchange of India (MCX) plunged as much as 9% on Friday after the exchange said the capital markets regulator has asked it to put the proposed launch of its Commodity Derivatives Platform in abeyance. Earlier during the week, MCX had indicated its intention to roll out the new software on October 3.

The stock erased a portion of its losses before closing at ₹2,049.3, down 2.4% over Thursday's closing. It touched a low of ₹1,914.6 during the day.

The Securities and Exchange Board of India's move to put the platform on hold follows writ petitions filed by the Chennai Financial Markets and Accountability (CFMA).

"It may be noted that writ petitions filed by CFMA on CDP is pending before the Hon'ble Madras High Court for disposal," said MCX in an exchange disclosure. "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."

MCX shares have surged 28% in the past month, driven by the anticipation of the forthcoming implementation of new software in October. This software implementation is expected to result in significant cost savings for the company. In the June 2023 quarter, the company had allocated about ₹88 crore for software expenses, which is 53% of the revenue of ₹166 crore.

MCX had hired Tata Consultancy Services (TCS) in September 2021 to design and deploy software for securities trading and market infrastructure. The new software was to replace the existing one before the end of its contract with 63 Moons in September 2022.

Due to technical issues, the new software failed to take off, and the bourse had to renew the software support service with existing vendor 63 Moons Technologies twice.

MCX on Friday said that the exchange is ready and keen to go live as soon as permitted. It added that it will continue to conduct CDP mock tests pending further directions in the matter from Sebi.