MCX to face probe over technical glitches

Mumbai : A series of technical glitches in the Multi Commodity of Exchange of India’s (MCX) trading system in the last two months is likely to lead to a “detailed investigation” by the regulator, owing to concern on whether the exchange is technologically capable of handling heavy order inflows ahead of opening the market to new products and new players.

The Securities and Exchange Board of India (Sebi) is in talks with MCX after the country’s top commodity bourse halted trade due to technical glitches on five occasions since May, a source said.

The stoppages coincided with extreme volatility in the global commodities market. The latest such case was at around 2010 IST on Monday, which lasted for over two hours, at a time when crude oil prices tumbled nearly 5 per cent.

“Indian traders were unable to cash in on the global volatility in prices of crude oil, gold and silver or copper on most of the occasions due to MCX’s system outage. Many investors couldn’t close their loss making positions quickly due to the outage,” said the research head of one of the top three brokerage houses.

Such instances have sent negative signals at a time when the commodity derivatives market is being opened to stock exchanges, which are much superior in terms of technology and other resources, the research head said.

Sebi has allowed stock exchanges to launch commodity derivatives from October 1, and National Stock Exchange and BSE have announced entry into the commodity segment from the first day itself, posing a major threat to MCX’s leadership in this segment.

On its part, MCX refuted claims of technological issues, claiming its trading system was capable of handling a much heavier volume of orders than what is usually seen during times of global volatility.

“The matter is currently being examined by our software vendor and the original equipment manufacturers (and) a preventive solution has been put in place based upon the recommendations of our software vendor and OEM,” the bourse said.

The bourse depends on a host of vendors for hardware, software and operating systems.

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