On Friday, the largest commodity derivative exchange in India, the Multi-Commodity Exchange, said that the market regulator has halted its planned transition to a new commodity derivative platform developed and serviced by Tata Consultancy Services.
The SEC advised MCX in a letter dated September 28 to keep its plans of going live with the new CDP in abeyance.
With the announcement, MCX shares fell 8.7 per cent to Rs. 1,913 before recovering most of its losses to Rs. 2,053, down 2.1 per cent from its previous day's close.
Sebi's decision followed a letter from the Chennai Financial Markets and Accountability regarding the proposed transition. The CFMA has filed writ petitions on CDP that are currently pending before the Madras High Court. During the launch of the CDP on October 31, MCX had been planning on launching it on October 3.
Then, domestic broker HDFC Securities keeps its 'buy' call on the MCX stock with a target price of Rs.2,400. In the long term, it thinks the shift to the new platform will improve margins.
In FY23/24E, the profitability of the technology vendor was impacted by the higher payment of Rs 140 crore/ Rs 330 crore to the technology vendor, resulting in a drop in the EBITDA margin. The move to the new platform will shift the cost structure to a higher fixed-cost model. The total cost will drop 51 per cent in FY25E due to a significant reduction in software support charges, the brokerage said.