"Don't Miss Me," 63Moons Mocks MCX

Parting ways like a romantic couple, India's largest commodity exchange MCX was teased by its two decade old technology vendor 63Moons (erstwhile Financial Technologies) on Monday in advertisements published in the leading newspapers titled, "Hope You Don't Miss Us." Each time MCX made attempts to cut ties with 63Moons over the past two years, it had to return to its 'old mate' for support as the new platform was not ready for all the action. On Monday, MCX finally decided to turn the switches on for the TCS developed tech platform at 10:45 AM and asked the brokers to disconnect from the old and move on to the new.

After recounting the best of the milestones in their relationship that had helped MCX achieve a monopoly position in India's commodity trading space, the ever so ballsy 63Moons also did not shy away from declaring its next affair: Cybersecurity, Web 3.0 and Blockchain, LegalTech.

"CeFi and Unicorns are history. DeFi and Decacorns are the future," declared the advertisement. On its new engagement, 63Moons further said in the same ad, "Wait till December 1, till we showcase the new technologies in the area." The share price of MCX was locked in a 5 percent upper circuit on Monday on the back of the announcement. CeFi is the traditional forms of centralized finance where currency and transaction flows are dominated by the banks and exchanges. DeFi enables peer-to-peer transactions without the need for a centralized exchange.

Meanwhile, the brokers took a cautious approach towards trading on MCX as the exchange faced some challenges on the first day of its transition. MCX website was slow in updating and some of the algo traders whom BW spoke to said they would wait to initiate any big trades for the next few days and see if the technology was stable enough to handle the load.

Delayed or no trade confirmations, widening of spreads than the usual days in crude and bullion metals, marred MCX's first day first show, the brokers said. A Delhi brokers also issued an advisory to his clients: "MCX has gone live with its new trading platform from today. However, we are facing issues wrt (with regard to) broadcast. We are in touch with the exchange to resolve this on priority. Further, multiple contracts are seeing lower volumes and higher bid ask spreads. As a risk measurement measure, we have blocked few illiquid contracts and blocked market orders." When contacted by BW, the broker later said that some of the issues were resolved by the exchange.

But most of the market players agreed that the real challenge for MCX would be to ensure smooth operations in the evening in India when the US and European markets open for trading. The MCX draws its reference rate for crude oil from the CME and gold from another US exchange while its metals from metal prices are benchmarked to the London Metal Exchange.

Lots of hope are riding on MCX and the exchange's share price too rose by 5 percent. "There will be issues in first few days. Always happens in a big technology transition, no one is worried about the short-term snags, the bigger picture is that MCX is out of clutches and now can fly once the system stabilizes," said a leading market expert with one of Mumbai's big brokerage firm.

MCX did not reply to an email query from BW regarding the issues and challenges on the first day of trading.

As per the last circular of MCX, for starters, the exchange said it will not have facilities like Multi-MAT, LTP-based spread, Spread IOC and Combination orders (2 Leg/ 3 Leg). It will also not handle the request for a change in IP address and the same would be effective from the next working day. Other features not available: Net position, margin-related functionalities, institutional trades. Its approval feature are available only through the BaNCS application. Disallowed: Product basket and turnover limit functionality at the user level.

Both the National Stock Exchange and the BSE have launched identical contracts like the MCX in crude, gold and metals to lure traders on their platform incase MCX's new technology remained a laggard for a few more weeks.

Palak Shah

BW Reporters The writer is author of the book: The Market Mafia - Chronicle of India’s High-Tech Stock Market Scandal & The Cabal That Went Scot-Free. Palak has been a journalist in Mumbai for nearly two decades now. He has worked for most premier pink papers including The Economic Times, Business Standard and The Financial Express and The Hindu Business Line. He was drawn to crime reporting at the age of 19 but a few years in the field told him that the fabric of crime had changed and the organised gangs, as Mumbai had witnessed during the eighties, no longer existed. It was business and markets that dominated the scenario. His passion to unravel the intricacies of the ‘white money’ economy led Palak to the world of finance and regulations.