For MCX, the tech transition to TCS was akin to changing airplane engine at 30,000 ft

The exertion modulation that began successful 2021, amid pandemic lockdowns, was “unprecedented globally" arsenic thing similar that had ne'er been done successful immoderate different speech that was up and running, said Reddy, whose five-year word astatine MCX volition fertile arsenic the astir eventful since the bourse began operations a small implicit 2 decades ago.

"What we fundamentally did was a daredevil act," Reddy told Mint successful a uncommon interrogation for the outgoing main executive. 

“The task was formidable successful that the caller level progressive integration of the trading and clearing and colony systems, made each the much challenging by the regulatory requirements to safeguard our markets against systemic risk. The markets regulator was precise cautious fixed (that it was) the archetypal clip specified a migration was happening, but they person been precise supportive."

Reddy demits bureau connected 9 May; an interior committee volition tally MCX until a caller CEO is appointed.

A scam and a pandemic

In February 2021, MCX awarded Tata Consultancy Services Ltd a declaration to instrumentality the caller tech platform, christened Project Udaan, by September 2022. 

TCS pipped the lone different shortlisted candidate, the London Stock Exchange Group, a supplier of fiscal infrastructure and data. Other candidates who had tendered expressions of involvement to physique MCX's caller level included 63 Moons Technologies Ltd and Nasdaq.

63 Moons, which was earlier known arsenic Financial Technologies India Ltd, was the laminitis of MCX. But it had to divest its 26% involvement successful the bourse successful 2014 pursuing a ₹5,600 crore scam successful its subsidiary National Spot Exchange Ltd. The Forward Markets Commission, which was past the regulator for the commodity and futures markets successful India, declared that 63 Moons was not acceptable and due to clasp involvement successful immoderate banal exchange. (The FMC was merged with the Securities and Exchange Board of India successful 2015.) 

63 Moons, however, was besides the exertion vendor for MCX, which had renegotiated its declaration with 63 Moons successful 2014 for 8 years done September 2022.

The caller platform, however, was delayed by a twelvemonth with dense outgo overruns—a full of ₹472 crore, against a mean outgo of ₹60 crore annually, which dragged down MCX's FY24 nett net by 44% to ₹83.1 crore.

Also read: Why MCX is warming up to a wider excavation of FPIs

Reddy attributed the hold to "bugs" that had to beryllium removed earlier the TCS exertion core—an integration of Deutsche Borse Group's T7 trading level and TCS' BaNCS for delivery, colony and hazard management—could substitute 63 Moons' software.

After a bid of adust runs eliminated each chinks, the caller level went connected watercourse connected 16 October past year. To Reddy's credit, the level has been stabilised, and MCX reported an aftertax nett of ₹87.9 crore for the January-March period aft 2 quarters of losses.

“Each clip the task was delayed, the vendor got an precocious manus to extract much from us," said Reddy, recounting the challenges astatine each postponement successful implementing the caller exertion core. "Probably, it wouldn't person been truthful stressful had the erstwhile vendor been much cooperative successful presumption of the monetary compensation they were asking for; each hold was huge. We had nary alternative; we couldn't regenerate the vendor overnight with immoderate different system."

The pandemic lockdowns during the 2nd question of Covid-19 besides posed a daunting challenge, preventing the colocation of the MCX and TCS teams.

“The teams participated done VC (video conferencing), resulting successful knowing gaps arising. As if this were not enough, definite members of our teams left, necessitating appointments of arsenic competent candidates. This besides caused delays successful the caller platform," said Reddy. “The lockdown was a beauteous analyzable process that we went through."

Only scratched the surface

The palmy migration to the caller exertion level saw investors re-rating MCX's stock. In day trading connected Monday, the company's shares were trading marginally higher by astir 1% astatine ₹4,055 apiece, up by astir 215% from the stock's 52-week debased of ₹1,285.05.

Asked whether Uday Kotak, whose Kotak Mahindra Bank owns a 15% involvement successful MCX, was supportive during the challenging period, Reddy said determination was "support" from shareholder directors. MCX is owned wholly by nationalist shareholders, with Kotak Mahindra Bank being the single-largest shareholder.

“All the clip they were helping... they understood the problems we were facing and said, 'Don't worry, spell up and you volition succeed'."

Investors successful the institution were besides supportive, helium said.

Reddy recalled a one-on-one telephone with an enforcement of a overseas portfolio capitalist successful MCX. According to Reddy, the FPI enforcement said, “We are not looking astatine what you're paying to them (63 Moons); we are looking astatine the aboriginal of (the technology). We are lasting down you rock-solid."

Reddy denied immoderate connection astir a imaginable merger with BSE during the troubled signifier oregon astatine present.

“The exertion contented and Covid bogged america down for two-to-three years, which has restricted improvement of this market. Going forward, determination is lone upward trajectory for MCX," said Reddy, who volition bent up his boots aft 38 years of being associated with the superior markets, including with the Central Depository Services (India) Ltd and BSE. “There is immense imaginable successful commodity derivatives and we person lone scratched the surface."

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Published: 06 May 2024, 11:30 AM IST