The two major events in 2023 that market players will remember for a very long time are the country’s largest commodity exchange, MCX, switching to new software, and the one-year extension of the prohibition on trading derivatives in seven important agricultural commodities.
After many failed attempts, MCX last month managed to switch over to a new software developed by Tata Consultancy Services from the one developed by 63 Moons Technologies).
In June of last year, at the last minute before the current services contract expired, MCX made the decision to extend its six-month software support contract with Jignesh Shah’s company, 63 Moons Technologies, by six months. A consideration of ₹250 crore was exchanged for the contract renewal.
The new platform is more efficient and scalable than the previous one. This can lead to faster order execution, improved market transparency and increased trading volumes. The shift away from 63 Moons Technologies as the sole software provider reduces risk and dependency on a single entity.
Ban on key commodities
The market regulator SEBI in October extended the ban on trading in agricultural futures for seven important commodities until December 2024 to control inflation, dealing a serious blow to the NCDEX, which focuses on agricultural derivatives.
The commodities that were banned from derivatives trading include paddy (non-basmati), wheat, chana, mustard seeds and its complex, soyabean and its complex, crude palm oil and moong. Incidentally, these commodities generated 55 per cent of NCDEX’s trading volume before they were knocked down.
Ajay Kumar, Director, Kedia Commodities said the commodities that were banned from trading were attracting good investor interest as the exchange had worked on spreading awareness on hedging among the user industry.
Source – The BusinessLine