SEBI May Act On MCX Trading Halt Due To Tech Troubles — Profit Exclusive

A major technical glitch at the Multi Commodity Exchange of India that brought trading to a halt on Wednesday has likely put the commodity bourse under regulatory lens, as per the people in the know.

The Securities and Exchange Board of India is likely to initiate action under the SEBI Act, Securities Contracts (Regulation) Act (SCRA), and the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations (SECC), sources told NDTV Profit.

The glitch, which halted trading this morning, was resolved at around 10:15 AM.

Sources said that SEBI will now seek a detailed report from MCX. Post analysis, the regulator may impose a flexible penalty depending on the gravity of the issue. Infrastructure capacity planning and internal management controls at MCX could also come under scrutiny.

In addition to regulatory action, affected investors also have the option to raise complaints on SEBI’s SCORES platform — the official mechanism for grievance redressal in the securities market.

Over the past two to three months, trading members have consistently reported operational disruptions, including delayed settlement files — typically sent around 8:30 a.m. — and errors in file formats. According to a person familiar with the matter, these problems had been escalating even as the exchange remained in touch with brokers.

"The issues weren’t new. Members had been facing operational hurdles for at least two to three months," said a person with direct knowledge.

In fact, in the days leading up to Tuesday’s halt, MCX had been operating from its disaster recovery site — a backup system used during emergencies. On July 21, the exchange formally notified its members that live trading was being conducted from the DR site.

“The exchange is conducting live trading from DR site. Members are requested to take note,” read an official alert dated July 21.

Trading has since resumed from the main site, which had briefly gone down due to a glitch. The exchange claims that the issue has now been resolved. Technical teams are still working to fine-tune backend systems.

Despite the resumption, market confidence appears shaken. Two people familiar with the matter told NDTV Profit that many traders are refraining from placing major orders due to lingering uncertainty.

As of March 31, 2025, MCX had 544 registered trading members and over 32,000 authorised persons across India.

On a positive note, sources confirmed that the glitch was not triggered by the high volumes from MCX’s recently launched electricity derivatives product.

At this point, the specific reasons for the technical glitch may be unknown. However, such incidents can significantly harm investor interests, said Avadhut Chavan, partner at IC RegFin Legal and a former SEBI official himself.

He added that Market Infrastructure Institutions, including stock exchanges and clearing corporations, bear critical responsibilities in ensuring investor protection and the robustness of market systems, particularly their IT infrastructure.

A technical glitch that results in a halt in trading may trigger SEBI to examine the matter through an inspection or investigation, Chavan said.