IEX shares falls 23 pc after CERC approves market coupling

New Delhi: Shares of Indian Energy Exchange Ltd (IEX) declined a whopping 23 per cent from yesterday’s close, after which it was locked in 10 per cent lower circuit on Thursday.

The massive drop came after the Central Electricity Regulatory Commission’s (CERC) decision for a phased rollout of market coupling across India’s power exchanges hit the market. The market coupling will begin with a three-month pilot run.

From Rs 187 per piece, shares of IEX fell as much as 10 per cent to Rs 169.10 apiece, as of 9:20 a.m. Since then, the massive selloff has persisted, resulting in the share’s current price of 144.66, which has locked it in the lower circuit.

Once the lower circuit is triggered, further selling can only happen at that circuit price, but massive sell orders may remain pending, which won’t get executed until circuit limits are revised or reset in the next session.

Traditionally, IEX and other power exchanges could set electricity prices independently through price discovery mechanisms. With market coupling, all buy and sell bids from various exchanges will now be pooled and prices set centrally, rather than by individual exchanges.

The centralisation may increase efficiency and unify electricity prices nationwide, but it is expected to erode the unique pricing power and dominance that IEX has enjoyed so far.

Since IEX earns most of its revenue from high-volume trading in the Day-Ahead Market and Real-Time Market segments, the market coupling could affect its position and profitability.

The stock has fallen 17.07 per cent in the last 12 months and 19.73 per cent year-to-date.

Indian Energy Exchange (IEX) is India’s first and largest power exchange, operating an automated, nationwide platform for trading electricity and related instruments. IEX currently handles over 85-98 per cent in traded volume.