MCX stock rises after transaction fee revision for F&O contracts; Morgan Stanley maintains underperform rating

The Multi Commodity Exchange of India (MCX) on Tuesday said it has revised transaction fees for futures and options (F&O) contracts after a directive from the markets regulator SEBI.

Shares of the Multi Commodity Exchange of India (MCX) rose approximately 2 percent following the company's announcement of a revision in transaction fees for both futures and options (F&O) contracts, set to take effect in October.

The updated fee structure will implement a fixed charge of Rs 2.10 per lakh of turnover for futures contracts and Rs 41.80 per lakh of premium turnover for options contracts. The latest revision marks a shift from MCX’s previous tiered fee system to a fixed transaction fee structure, in line with instructions from the Securities and Exchange Board of India (SEBI).

The change aligns with SEBI’s “True to Label” principle, which ensures that the fees charged to clients by exchange members are consistent with the fees charged by the exchange itself. The adjustment seeks to enhance transparency and fairness in the market, further solidifying MCX’s commitment to investor protection, the company said.

Following the update, Morgan Stanley MS has issued an underperform call on MCX stock with a target price of Rs 2,950 per share. Ceteris paribus (assuming that other relevant factors remain constant), this increase in transaction fees is expected to lead to a 5 percent rise in EPS for FY26, the brokerage said.

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Large proprietary and high-frequency traders are likely to be particularly sensitive to this fee increase, prompting a need to evaluate its potential impact on trading volumes, it added in its note.

SEBI had previously expressed concerns about the slab-based charge system utilized by certain Market Infrastructure Institutions (MIIs), including MCX. Under this tiered system, clients might have been charged more than what the MIIs actually collected, resulting in transparency issues and potentially disadvantaging market participants.

In response, the market regulator called on MIIs to ensure that the fees billed to clients accurately reflect the amounts collected from members. The directive also highlighted the necessity for a uniform fee structure across the market, moving away from the slab-based approach.

This change is anticipated to lower costs for clients and promote a more equitable trading environment. The latest revision in transaction fees by MCX is a direct response to these regulatory concerns, aiming to enhance market integrity and client confidence.

At 9:28 am, MCX shares were trading over a percent higher at Rs 5,949 on NSE. The stock has rallied 88 percent so far this year, outperforming Nifty's returns of 19 percent. In the past 12 months, the counter has skyrocketed 213 percent, more than tripling investors' money. In comparison, Nifty rose 31 percent during this period.

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