SEBI Penalizes Multi Commodity Exchange For Disclosure Lapses On Funding 63 Moons Technologies
The fine must be deposited within 45 days
The Securities and Exchange Board of India (SEBI) has imposed Rs.25 lakh on Multi Commodity Exchange of India (MCX) for failing to disclose payments to 63 Moons Technologies (formerly Financial Technologies India Ltd) for software services.
The market regulator maintained that the lack of transparency violated SEBI’s (Listing Obligations and Disclosure Requirements) Regulations.
In 2003, MCX entered a trading software contract with 63 Moons, which was then owned by MCX.
In 2020, MCX shifted to a new trading platform (CDP) and gave the development contract to TCS.
However, delays occurred in the rollout, leading MCX to extend services with 63 Moons at a significantly higher cost.
MCX disclosed that between September and December 2022 it extended (Support and Managed) services for its trading and clearing platform with 63 Moons.
However, Ashwani Bhatia, the Whole-Time Member of SEBI held, “It did not reveal the high payments of Rs.60 crore for October-December 2022 and Rs.81 crore per quarter till half-year ended June 2023, totalling to Rs.222 crore over three quarters (October 2022-June 2023). The amount was almost twice the company’s profit in Financial Year 2021-2022 (Rs.118 crore) but it was disclosed in January 2023.”
SEBI maintained that the increased quarterly payments had a huge bearing on the profitability of MCX. Thus, it ordered the company to compensate for violating the rules.