National Commodity & Derivatives Exchange

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National Commodity & Derivatives Exchange (NCDEX)
NCDEX.jpg
Founded 2003
Headquarters Mumbai, India
Key People Vijay Kumar, MD and CEO
Website http://www.ncdex.com/


The National Commodity & Derivatives Exchange (NCDEX), launched in 2003, is India's second largest commodity derivatives exchange. The exchange offers contracts on a wide variety of commodities in agriculture, precious metals, energy, polymers and spices.

The exchange also operates its own clearinghouse, National Commodity Clearing Ltd., which opened in September 2018.[1]

The NCDEX ranked 34th among global derivatives exchanges in terms of volume in 2018, with 15 million contracts traded, up 9 percent from a year earlier, according the FIA Annual Volume Survey.[2][3]

Background

The NCDEX formed in April 2003, shortly after its regulator the Forward Markets Commission (FMC) made reforms to India's futures markets aimed at encouraging growth and competition. Its three initial shareholders - the National Stock Exchange of India (NSE), the Life Insurance Corporation of India and the National Bank for Agriculture and Rural Development - were later expanded to ten (see below).

Two years after NCDEX began trading in December 2003 it suffered its first setback when the FMC ordered the exchange to fire an unnamed executive after ruling it had violated settlement-price rules on January 2006 contracts for two agricultural commodities.[4] The following year the Indian government banned trading in four different commodities, including wheat and rice, and suspended trading on four others under pressure from a left-wing coalition member, although an election earlier this year has led to some easing of those restrictions.[5] And earlier this year the NCDEX's bid to reduce its transaction fee was rejected by the FCM as "neither in the interest of the exchange nor of the industry as a whole".[6]

Ownership

The NCDEX's initial three-way ownership structure later expanded to nine by adding four new Indian partners - Canara Bank, Crisil, Punjab National Bank and Indian Farmers Fertilizer Cooperative (IFCO), and two international ones: New York-based investment bank Goldman Sachs and Atlanta-based Intercontinental Exchange (ICE). In mid-2009 ICE and Goldman Sachs added a tenth partner by agreeing to sell 3 percent and 2 percent of their shares respectively to listed India processor Shree Renuka Sugars, giving the three a 5 percent stake each in NCDEX.[7] The three original shareholders now each hold 15% stakes while Crisil and IFCO hold 12% each and Punjab National and Canara each have 8%.

The exchange added Jaypee Capital Services as an "anchor" stakeholder in October 2010, taking a 22 percent stake in the exchange. National Stock Exchange of India and National Bank for Agriculture and Rural Development each lowered their stakes to 11.5 percent as a result of Jaypee's investment, from a prior level of 15 percent each.[8] [9]

In May 2011, it was reported that the Oman Investment Fund, the national sovereign wealth fund, purchased a 5 percent stake in the NCDEX from the National Stock Exchange of India (NSE). And unnamed hedge fund also agreed to take a 1.1 percent investment in NCDEX. In May 2011, the deal was still pending final approval.[10]

In 2019, the exchange listed its shareholders as the following: Life Insurance Corporation of India (LIC), National Bank for Agriculture and Rural Development (NABARD), National Stock Exchange of India Limited (NSE), Canara Bank, Punjab National Bank (PNB), CRISIL Limited, Indian Farmers Fertiliser Cooperative Limited (IFFCO), Goldman Sachs, Intercontinental Exchange (ICE), Shree Renuka Sugars Limited, Jaypee Capital Services Limited, Build India Capital Advisors LLP, Oman India Joint Investment Fund, IDFC Private Equity Fund III, Star Agriwarehousing and Collateral Management Limited and negligible shareholding by individuals.[11]

Product categories

NCDEX offers futures contracts in the following categories:

  • Agricultural
  • Precious metals
  • Base and ferrous metals
  • Energy
  • Polymers

Contract Volume

Year Total Annual Volume* Percent Change
2018 15,537,378 9.9%
2017 14,130,802 (-)30.5%
2016 20,339,532 (-)31.2%
2015 29,545,534 (-)2.0 %
2014 30,129,128 (-)7.1 %
2013 32,435,100 (-)27.7%
2012 44,885,711 (-)5.3%
2011 ~47,400,000 (est.) 17.9%
2010 40,190,612 34.1%
2009 29,965,383 --

Key people

Vijay Kumar, managing director and CEO

Anand Iyer, chief information officer

Jayant Nalawade, chief regulatory officer

Ananda Kumar, chief corporate services and company secretary

Raj Benahalkar, chief strategy and risk

Nidhi Nath Srinivas, chief marketing officer

References

  1. NCDEX starts clearing operations via subsidiary. Hindu Business Line.
  2. 2018 Annual Volume Survey. Futures Industry.org.
  3. FIA Annual Volume Survey. FIA.
  4. Regulator cracks down on NCDEX. rediff.com.
  5. New government seen pushing commodity market reforms. Reuters.
  6. FMC rejects NCDEX plan to lower transaction fee. Sifybusiness.com.
  7. Goldman, ICE look to offload stake in NCDEX. Economic Times.
  8. JP Capital set to be anchor investor in NCDEX. the Financial Express.
  9. NCDEX to rope in Jaypee Capital as anchor investor. The Economic Times.
  10. Oman Sovereign Wealth Fund to Buy 5% in NCDEX. The Economic Times.
  11. About Us. NCDEX.

External Links