IEX shares fall as APTEL dismisses plea, allows CERC to proceed with market coupling

IEX Market Coupling Case: Shares of Indian Energy Exchange (IEX) fell nearly 4 per cent on February 13 after the Appellate Tribunal for Electricity (APTEL) dismissed the company’s plea challenging the market coupling direction issued by the power regulator, the Central Electricity Regulatory Commission (CERC). APTEL allowed the regulator to proceed with framing regulations for market coupling. Following the ruling, IEX shares fell 1.6 per cent to end at Rs 123.9 apiece on BSE amid a market-wide sell-off.

The tribunal’s decision clears the way for CERC to move ahead with the proposed market coupling framework, a structural change that could dilute IEX’s dominant position in the power trading ecosystem by introducing uniform price discovery across exchanges.

What APTEL said

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IEX had challenged CERC’s July 23, 2025 direction on market coupling, arguing that it was improperly issued and would adversely impact the exchange’s business model. However, CERC told APTEL that the July 2025 direction was not a final “order” but part of the legal process for framing regulations under the Power Market Regulations, 2021.

APTEL agreed with the regulator, observing that it could not restrain CERC from framing regulations. The tribunal dismissed IEX’s appeal, allowing the regulator to continue with the market coupling process.

Why market coupling matters

Market coupling is an economic mechanism under which bids from all power exchanges are aggregated, and a single agency determines a uniform market-clearing price for electricity. This removes separate price discovery on individual exchanges and reduces the pricing advantage enjoyed by the dominant platform.

Currently, electricity trading in India takes place on IEX, Power Exchange of India and Hindustan Power Exchange. IEX holds nearly 85 per cent overall market share, with a near-monopoly in key segments such as the Day-Ahead Market (DAM) and Real-Time Market (RTM).

Under the proposed new framework, starting from January 2026, Grid-India is suppose to aggregate bids across exchanges and publish a single unified price for the DAM. Exchanges will effectively act as bid-collection platforms, forwarding orders to the market coupling agency.

Impact on IEX

Market participants believe the introduction of market coupling could reduce IEX’s market share in the DAM and RTM segments from around 84 per cent to 60–70 per cent over time. This could pose risks to trading volumes, revenues and margins, while also forcing the company to invest in new software and infrastructure and potentially rework its business model.

Notably, when CERC first issued the market coupling direction in July 2025, IEX shares had plunged nearly 30 per cent in a single session on fears of long-term impact on the exchange’s revenue model.

With APTEL’s latest ruling removing a key legal hurdle, investor focus is now likely to shift to the final contours and timeline of the market coupling regulations—and how effectively IEX can adapt to a more level playing field in India’s power trading market.