MCX signs software support and services deal with FTIL

The Multi Commodity Exchange (MCX) on Monday said it has entered into a new agreement with Financial Technologies (FTIL) for availing software support and managed services till 2022.

The pact (a supplementary agreement), inked on mutually agreed terms, marks the continuation of technology partnership between the two companies, founded by entrepreneur Jignesh Shah, and comes as a shot in the arm for MCX as it seeks to launch fresh contracts.

In a filing to the BSE, the commodity bourse said the agreement was entered into with several changes.

As per the new agreement, MCX will pay FTIL a fixed charge of Rs 1.5 crore per month, including managed services payable in advance on semi-annual basis. Earlier, it was paying Rs 2 crore per month.

FTIL will also get a variable charge of 10.3 per cent of gross transaction fees as compared to 12.5 per cent earlier.

Last week, FTIL said it had signed a 10-year long technology contract with the commodity exchange (the new one is for 8 years), resulting in a negative impact of nearly Rs 9 crore on its total income for this fiscal.

The Jignesh Shah-led company said, "Due to this supplementary agreement, and based on the current volume of MCX and assuming MCX daily volume remains same, the negative impact on the total income of the company would be around Rs 8.82 crore for the period of 2014-15."

In 2013-14, MCX paid about Rs 60 crore to FTIL for receiving technological support and services. The new pact will pave the way for the commodity bourse to launch new contracts for January to March period of 2015.

MCX is confident that it will be allowed to launch all its contracts for the year 2015 once the full divestment by FTIL of its stake in MCX takes place in compliance with sector regulator Forward Markets Commission's (FMC) order.

On September 17, the commodity markets watchdog said the exchange can launch new contracts for first three months of 2015 after if it signs a fresh technology deal with FTIL.

FTIL had said that by entering into the new agreement, it has completed all formalities to close its sale of 15 per cent stake in MCX to Kotak Mahindra Bank.

FMC had said the exchange will be allowed to roll out contracts for entire 2015 once the full divestment of FTIL in MCX takes place as per the regulatory norms.