NEW DELHI: The Securities and Exchange Board of India (SEBI) on Monday imposed a Rs 25 lakh penalty on the Multi Commodity Exchange of India (MCX) for failing to adequately disclose substantial payments made to 63 Moons Technologies (formerly known as Financial Technologies India Ltd).The penalty, which must be paid within 45 days, stems from insufficient transparency in MCX’s disclosures related to payments for trading software services. The matter revolves around continued payments to 63 Moons after delays in implementing a new trading platform developed by Tata Consultancy Services (TCS).MCX had originally signed a software agreement with 63 Moons in 2003, when the latter was the sole owner of the exchange. Although MCX decided in 2020 to transition to a new platform- Commodity Derivatives Platform (CDP)- built by TCS, project delays led to extended reliance on 63 Moons’ services at significantly higher costs.According to Sebi’s findings, between October 2022 and June 2023, MCX paid Rs 222 crore to 63 Moons, including Rs 60 crore in the October–December 2022 quarter and Rs 81 crore in each of the next two quarters. These figures were not disclosed in real time, despite the fact that they far exceeded earlier payments and had a major bearing on the company’s profitability.Sebi noted that the total amount paid during these three quarters was nearly double MCX’s net profit of Rs 118 crore in FY 2021–22. However, the full extent of these payments was only publicly disclosed in January 2023, well after the fact.“I note that the quarterly payments made by MCX to 63 Moons for three quarters between October 2022 and June 2023, which totalled Rs 222 crore, were much larger than the annual profit of MCX for the previous financial year,” said Sebi whole time member Ashwani Bhatia. “This information was material… and warranted public disclosure under the LODR Regulations,” he added.Sebi noted that the failure to disclose such significant financial outflows in a timely manner constituted a violation of the Listing Obligations and Disclosure Requirements (LODR) Regulations, 2015, thereby justifying the monetary penalty.
