MCX slips 11% after extending contract with 63 moons which sees a 12% gain

The Multi Commodity Exchange Of India or MCX stock has fallen over 11% after deciding to extend its software support contract with 63 Moons Technologies, the former promoter of the bourse, after repeatedly failing to transition to a new trading platform within stipulated deadlines. The contract is priced at Rs 125 crore per quarter, compared to Rs 87 crore that it paid for the March quarter and Rs 67 crore that it paid in the quarter before that.

This news has augured well for the 63 Moons stock which has rallied over 12% at the time of publishing. In an early morning stock exchange filings, Multi Commodity Exchange of India Ltd and 63 Moons said the contract has been extended for a period of six months starting July 1.

MCX said that to ensure all stakeholders are better prepared to migrate to the new Commodity Derivatives Platform and to ensure necessary compliances, the company was obligated and has decided to extend the support services being rendered by its existing software vendor, 63 Moons Technologies Ltd.

The contract has been renewed at a consideration of Rs 125 crore per quarter, which would translate into Rs 250 crore for the six-month period.

"We understand the importance of providing a reliable and robust platform to our users, and we are committed to continuously improving our services. We will communicate to all our stakeholders, about the roll-out plan to migrate to the new Commodity Derivatives platform," MCX said.

On the other hand, 63 moons, formerly known as Financial Technologies India Ltd, said it has "once again agreed to the eleventh-hour request by MCX, which according to MCX is for the 'last time' for one more time.

"We sincerely wish that this 'last time' really happens someday, so that we deploy our excellent team of exchange technology engineering group in mega promising opportunity in the new digital world," it added.

This is the third time that MCX approached 63 moons to extend the software support service arrangement after the long-term arrangement with MCX ended on September 30, 2022, and MCX selected a new technology service provider way back in February 2021.

63 moons further said it has been offering MCX since August 2020 an option to purchase the software source code for self-use which is in line with the practices adopted by all best exchanges in India as well as across the world.

"We had also offered them long-term contracts of two years in 2022. However, for the reasons best known to them, they have not opted for it.

"These are mission-critical technology which is of the highest excellence in functionality and performance. 63 moons technology exchange engine has been at the heart of MCX since 2003 (20 years) working uninterruptedly for 16 hours a day all throughout," it added.

63 moons further said that "as the founders and well-wishers of MCX, we wish them good luck with these new experiments and hope that they will reach the right destination one day.

In the last few weeks, MCX had to cancel several mock trading sessions which were aimed at checking the new trading platform.

The technology support for MCX has been provided by 63 Moons, its erstwhile founder-promoter, ever since it started operations in November 2003.

However, Tata Consultancy Services (TCS) was selected as the vendor for the development of the new commodity derivative platform in February 2021.

The Multi Commodity Exchange of India Limited, the country's first listed exchange, is a commodity derivatives exchange that facilitates online trading of commodity derivatives transactions.

(Text input from PTI)