The Securities and Exchange Board of India (SEBI) has asked the Multi Commodity Exchange of India (MCX) to halt the launch its new commodity derivatives platform on 29 September. MCX has informed of the development in a letter to the Bombay Stock Exchange. The new platform was due to be launched next week.
MCX's shares plunged by about 8 percent to a low of Rs 1,932.05 on 29 September following the news.
In a letter to the Bombay Stock Exchange, the MCX claimed that the Chennai Financial Markets and Accountability (CFMA), the market regulator, had emailed it about the new platform.
The Madras high court is currently hearing writ petitions filed by the CFMA on the commodity derivatives platform, according to information provided by MCX to the BSE. This is also the reason why SEBI has asked MCX to put it new platform's launch on hold.
"It may be noted that writ petitions filed by CFMA on CDP are pending before the Hon’ble Madras High Court for disposal," MCX said in an exchange filing said.
“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”, the letter by MCX stated.
MCX had earlier informed that its new commodity derivatives platform will be launched on 3 October.
MCX is a commodity derivatives exchange for online trading of commodity derivatives transactions. It provides a platform for price discovery and risk management. The Securities and Exchange Board of India (SEBI), which oversees the exchange's activities, began overseeing it in November 2003.