IEX at 10% LC

Indian Energy Exchange (IEX) is the top loser on the BSE since the opening bell today; from its close of Rs.187.85 yesterday, today it opened itself at its 10% LC of the day at Rs.169.10, where it now remains frozen.

The stock price of IEX is down after reports suggest that Central Electricity Regulatory Commission (CERC) approved the implementation of Market Coupling for Day Ahead Market (DAM).

This, if implemented, is a major structural shift that could dilute IEX's pricing power and monopoly advantage in power trading.

Market coupling centralizes price discovery across exchanges, creating one uniform market clearing price, regardless of where the bids originate. All power exchanges submit bids to a central Market Coupling Operator (MCOP), who matches trades based on economic efficiency, not exchange preference.

This aligns India with European electricity market norms, increasing transparency but limiting exchange autonomy.

Currently, power buyers and sellers bid directly on individual platforms like IEX, PXIL, etc and each exchange has its own market clearing price and volumes. But after this coupling comes in, all bids and offers across all exchanges will be aggregated by a central market coupling operator (MCOP).

This means, henceforth a single market clearing price will be determined for each time block. Trades will then be allocated across exchanges based on who gives the best economic efficiency, not who gets the most participants.

IEX has enjoyed near-monopoly status in DAM with over 90%+ market share. Market coupling reduces its pricing power. Thus, this move by CERC, aimed at making the market more transparent and create a more level playing field, will impact IEX as this threatens trading fee advantage, opens up more competition, losing its monopolistic status and will put pressure on growth and margins.