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Informist, Tuesday, Apr. 1, 2025

--MCX settles a margin shortfall norms breach case with SEBI for INR 27 mln

NEW DELHI – Multi Commodity Exchange Clearing Corp Ltd, the clearing subsidiary of Multi Commodity Exchange of India Ltd., has settled a case of breach of norms with the Securities and Exchange Board of India for INR 27 million, according to a settlement order issued by the securities market regulator on Tuesday. SEBI had conducted an annual inspection of the clearing corporation during December 2022-October 2023 and found it in breach of rules on margin shortfall by members.

SEBI did not initiate any enforcement action against MCX or its clearing subsidiary, but MCX Clearing Corp had itself filed a suo motu settlement application with SEBI. In its settlement order Tuesday, SEBI said the clearing subsidiary of MCX "had blocked highest margin shortage instead of cumulative margin shortage in the past 30 days from the deposits of the clearing member for the purpose of calculation of Margin Shortfall Block Amount". 

SEBI's circulars for commodity derivatives exchanges with respect to risk management norms require them to, among other measures, collect a "penal exposure free deposit equal to the cumulative funds or margin shortage over previous one month which could be kept with the exchange for the next month." The MCX clearing arm subjected clearing members in such cases with a lower amount by imposing margin shortfall deposit equivalent to the highest margin shortfall of the member over the previous one month.

MCX Clearing Corp, which is a wholly-owned subsidiary of MCX, has paid the settlement amount to SEBI without admitting or denying the breach. SEBI will not initiate enforcement action for this particular violation, the settlement order said.

On Tuesday, shares of MCX ended 1.6% lower at INR 5,227.90 on the National Stock Exchange of India.  End

Reported by Rajesh Gajra

Edited by Avishek Dutta

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