The exchange spends Rs 20 crore per annum on technology, hopes to bring it down to Rs 12-15 crore in next six to nine months
Metropolitan Stock Exchange of India (MSEI) is planning to withdraw the technology pact with Mumbai-based 63 Moons, formerly known as Financial Technologies (India) Ltd.
MSEI is likely to end the tie-up in next six to nine months, according to senior exchange officials.
After the National Spot Exchange limited (NSEL) fiasco which dealt a heavy blow to FTIL, a leading commodity bourse Multi Commodity Exchange (MCX) has already negotiated on the contract price and the tenure.
On its part, MSEI has been working to reduce fixed cost of exchange, and the technology cost is among the main components of fixed cost of any exchange. A senior MSEI official told dna, "We spend Rs 20 crore per annum on technology which is very high as compared to other exchanges. We hope to bring it down to Rs 12-15 crore in next six to nine months period of time."
The MSEI move has come as a rude shock for FTIL since it has only two major clients in the exchange platform technology group. If the exchange withdraws the licensing pact, which is a 99-year lease agreement, it will impact the company's revenues. MSEI alone contributes 15% of business in the technology provider's balance-sheet.
The exchange official told dna, "We will put a full-stop to all engagement with FTIL, but with mutual understanding."
The exchange official said, "We are in talks with Tata consultancy services, HCL Tech and Bloomberg for technology pact. We will finalise service provider very soon'.
On the other hand, the Multi Commodity Exchange will participate in the right issue of MSEI. MCX will put money in the right issue which will close on September 9.
MCX sources told dna, "We will participate in the right issue but we will not use fresh money in participating in right issue. We will use Rs 15 crore which is supposed to be given by MSEI on the out-of-court settlement."
The MSEI official also confirmed the exchange's participation, "We are in touch with the senior management of MCX for subscribing to the right issue."
When contacted by dna, MCX declined to comment.
MCX's shareholding in MSEI will increase from 3.99% to 15% after the right issue. However, MSEI is not much keen to merge with MCX.
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