IEX shares jump 4% as CERC calls exchange ‘monopolistic’ in market coupling case

IEX Market Coupling Case Update: Shares of Indian Energy Exchange (IEX) climbed over 4 per cent on Monday after fresh regulatory developments emerged in its ongoing legal battle over market coupling, even as the Central Electricity Regulatory Commission (CERC) took a sharply critical stance against the exchange.

The stock rose as much as 4.2 per cent to around Rs 126 in intra-day trade, despite the CERC filing an affidavit before the Appellate Tribunal for Electricity (APTEL) that described IEX as “monopolistic” and accused it of attempting to preserve entrenched market power through litigation.

In its affidavit, the electricity regulator argued that IEX’s challenge to the market coupling move is not legally maintainable. CERC maintained that what IEX has contested is not a formal “order” but merely a “direction”, against which an appeal does not lie under the Electricity Act.

According to the regulator, the market coupling direction is a preliminary step within a larger consultative and pre-legislative process, intended to initiate discussions and framework-building rather than impose a binding or final decision.

“The direction is only to commence the market coupling process and cannot be equated with an adjudicatory order,” CERC said, adding that IEX’s legal action seeks to stall a reform aimed at improving efficiency and transparency in power markets.

The regulator went further to allege that IEX, which dominates volumes in the power trading space, is using litigation as a tool to preserve its market position. CERC described the exchange as monopolistic and said its actions were aimed at delaying reforms that could dilute its dominance once market coupling is implemented.

Market coupling is expected to bring multiple power exchanges onto a common price discovery platform, potentially reducing the influence of any single exchange.

The affidavit also addressed IEX’s references to a separate Securities and Exchange Board of India (SEBI) order related to insider trading. CERC clarified that the SEBI order was passed ex-parte and did not contain any specific allegations against the commission or its processes.

The regulator alleged that IEX was attempting to link the market coupling issue with the SEBI matter in order to question CERC’s regulatory and rule-making authority. It added that investigations into parties named by SEBI were already underway and were unrelated to the market coupling framework.

Despite the strong language used by the regulator, investors appeared unfazed in the near term, with the stock extending gains during the session. Market participants said the rally may reflect expectations that the legal process will take time, allowing IEX’s core business to remain largely unaffected in the interim.

The focus now shifts to APTEL, which is expected to first rule on whether IEX’s appeal against the market coupling direction is maintainable.