MCX Faces Second Major Trading Glitch in Three Months, SEBI Seeks Explanation

Multi Commodity Exchange of India (MCX), the nation's leading commodity exchange, suffered another major technical failure on October 28, marking the second such incident in just three months. The trading platform experienced a glitch that led to a suspension of services for approximately four hours before operations could resume. This recurring issue has intensified scrutiny over MCX's technological infrastructure and its ability to maintain seamless trading operations.

The Securities and Exchange Board of India (SEBI), the market regulator, has officially requested MCX to provide a detailed review and explanation for the repeated technical disruptions. Experts like Sandeep Parekh of Finsec Law Advisors and Abhishek Dadoo of Khaitan & Co commented on the situation. While Parekh noted that technology failures are common across sectors and emphasized preparedness and quick recovery, Dadoo stressed the higher standards expected of a market institution like an exchange, where confidence and price discovery are paramount. Dadoo also highlighted that regulatory procedures require exchanges to declare halts as disasters and switch to disaster recovery sites within strict, predefined timelines, with financial disincentives for non-compliance. The regularity of these glitches, especially the extended duration of the recent halt (over four hours), suggests a more fundamental issue that MCX needs to address urgently to restore market confidence.

Impact: This news directly impacts the Indian stock market, specifically the commodity trading segment, by raising concerns about operational reliability and investor confidence in a major exchange. Rating: 7/10

Difficult Terms: * Glitch: A minor, usually temporary, malfunction or problem with a system. * Trading Suspension: A temporary halt in the buying and selling of securities on an exchange. * Technological Resilience: The ability of a technology system to withstand and recover from disruptions or failures. * Market Regulator: An official body responsible for overseeing and regulating financial markets to ensure fairness and transparency (in India, this is SEBI). * Disaster Recovery (DR) Site: A backup location where an organization can continue its IT operations in the event of a disaster or system failure at its primary site. * Price Discovery: The process by which the market determines the price of a good or service through the interaction of buyers and sellers.