IEX Shares Slide Over 4% As Supreme Court Refuses To Intervene In CERC's Market Coupling Dispute

Shares of Indian Energy Exchange (IEX) fell more than 4% on Monday, August 3, after the Supreme Court declined to intervene in the company's challenge against the Central Electricity Regulatory Commission's (CERC) proposed market coupling framework.

According to CNBC-TV18, the apex court said it was "not the appropriate stage" to hear the matter and allowed CERC to continue drafting the regulations. However, it clarified that it had not expressed any opinion on the merits of the case and that IEX would be free to challenge the regulations after they are formally notified.

At around 1:40 pm, IEX shares were trading at ₹126.86, down over 4% for the day.

During the hearing, IEX sought a stay on the regulation-drafting process, arguing that market coupling would adversely affect competition among power exchanges. The company said its commercial success could not be "nationalised" and questioned why different exchanges should be brought under a common pricing mechanism.

It also argued that exchanges such as IEX, Power Exchange India Ltd (PXIL) and Hindustan Power Exchange (HPX) operate differently and should not be treated as a single market. The company further raised concerns over an alleged conflict of interest, referring to a SEBI report that it claimed flagged illegal trading involving certain CERC officials associated with the regulation-drafting process.

The Supreme Court, however, was not convinced that judicial intervention was necessary before the regulations were finalised. According to CNBC-Awaaz, the court observed that the electricity trading market required regulation and said IEX could challenge the framework after CERC notified the final rules.

What Is Market Coupling?

At present, electricity buy and sell orders are matched independently on each power exchange, resulting in separate market-clearing prices.

Under the proposed market coupling mechanism, orders from all exchanges, including IEX, PXIL and HPX, would be pooled to determine a single market-clearing price. CERC has said the proposal is aimed at improving price discovery, increasing market efficiency and reducing price differences across exchanges.

In 2024, the regulator approved a shadow pilot for market coupling and asked the Grid Controller of India to conduct trial runs, with IEX, PXIL and HPX taking turns as the market operator.

Investors remain focused on how the proposed framework could affect IEX's dominant position in India's power exchange market, making further regulatory developments a key trigger for the stock.

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