National Commodity & Derivatives Exchange

From MarketsWiki
Jump to: navigation, search
National Commodity & Derivatives Exchange (NCDEX)
NCDEX.jpg
Founded 2003
Headquarters Mumbai, India
Key People CEO Ramalinga Rameseshan
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 26 commodities, 21 of which are in agriculture, 2 precious metals and one in energy and polymers.

The NCDEX ranked number 35 among global derivatives exchanges in terms of volume in 2016, with 20.3 million contracts traded, down 31.2 percent from 29.5 million in 2015, according the FIA Annual Volume Survey.[1]

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.[2] 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.[3] 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".[4]

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.[5] 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.[6] [7]

In May 2011, it was reported that the Oman Investment Fund, the national sovereign wealth fund for that country, agreed to purchase a 5 percent stake in the NCDEX from the National Stock Exchange of India (NSE). And unnamed hedge fund also agree to take a 1.1 percent investment in NCDEX. In May 2011, the deal was still pending final approval.[8]

Product categories

NCDEX offers futures contracts in the following categories:

  • Agricultural
  • Precious metals
  • Base and ferrous metals
  • Energy
  • Polymers
  • On April 4, 2011, the exchange launched polyvinyl chloride (PVC) futures and announced plans to relaunch Brent crude oil futures.[9]
  • In 2008 the NCDEX also launched carbon credits but cannot create a market in them because Indian law permits only sellers of such contracts. The exchange is awaiting passge of a key futures-trading bill to widen the scope of Indian derivatives trading to allow buyers.[10]

See below for list of NCDEX traded contracts with current MarketsWiki entries.

Contract Volume

Year Total Annual Volume* Percent Change
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

Samir Shah, managing director, 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

Recent performance

The NCDEX has apparently weathered the recent commodities-trading restrictions imposed by the government and volatile markets buffeted by the 2008 financial crisis. In May 2009 the NCDEX and its main national rival, the Multi Commodity Exchange of India (MCX), reintroduced wheat futures trading shortly after the FCM lifted its two-year ban.[11] The NCDEX currently ranks number 34 among the world's largest derivatives exchanges, according the Futures Industry Association - down from number 28 in 2006 - while rival MCX has increased its lead to number 22.[12]

Contracts traded

Agricultural Products

Precious Metals

Base Metals

Ferrous Metals

Energy Products

Polymers


Carbon Credits

References

  1. 2016 Annual Volume Survey. FIA.
  2. Regulator cracks down on NCDEX. rediff.com.
  3. New government seen pushing commodity market reforms. Reuters.
  4. FMC rejects NCDEX plan to lower transaction fee. Sifybusiness.com.
  5. Goldman, ICE look to offload stake in NCDEX. Economic Times.
  6. JP Capital set to be anchor investor in NCDEX. the Financial Express.
  7. NCDEX to rope in Jaypee Capital as anchor investor. The Economic Times.
  8. Oman Sovereign Wealth Fund to Buy 5% in NCDEX. The Economic Times.
  9. NCDEX TO LAUNCH PVC FUTURES TODAY. Business Standard.
  10. NCDEX for proper policy on carbon credit trading. The Hindu.
  11. NCDEX, MCX re-launch wheat futures from today. The Hindu.
  12. Commodity players seek reforms, market depth. Wall Street Journal.

External Links