PRESENTATION

ON
NCDEX PLATFORM
OF
COMMODITY AND FINANCIAL
DERIVATIVES
Submitted To:-

Submitted By:-

Miss Aanchal Mam

(Assistant Professor)
USM KUK

Neha (09)
Mohit aggarwal (29)
MBA SFS Final

2015

Contents

About NCDEX
Product & Services
Market Structure
Classification of Commodities
Shareholders/ Membership
Risk Management
How to Invest
Key Facts

About NCDEX

It is an online commodity exchange based in India.

It has an independent Board of Directors and professional
management, who both have vested interest in commodity
markets.
It provides a commodity exchange platform for market
participants to trade in commodity derivatives.
It is a public limited company, incorporated on 23 April
2003 under the Companies Act,1956.
It obtained its Certificate for Commencement of Business
on 9 May 2003, and began operations on 15 December
2003.

Cont.

NCDEX is the only commodity exchange in the country

promoted by national institutions.
NCDEX is regulated by the Forward Markets
Commission (FMC), and is subject to the Companies Act
2013, Stamp Act, Contracts Act, Forward Commission
(Regulation) Act, and various other laws.
NCDEX has offices
in Mumbai, Delhi, Ahmedabad, Indore, Hyderabad, Jaipur,
and Kolkata.[

Products & Services:

NCDEX offers futures trading in 31 agricultural and nonagricultural commodities.

NCDEX also offers as an information product, an
agricultural commodity index. This is a value-weighted
index called DHAANYA and is computed in real time
using the prices of the ten most liquid commodity
futures traded on the NCDEX platform.
Dhaanya aims to provide a reliable benchmark for India's
agri-commodities.
Introduced N-Charts a free, web-based charting tool
provided to users for technical analysis.

Cont.

Launched COMTRACK - a proprietary electronic

warehouse accounting system
Launched GOLD HEDGE, a transparent price benchmark
of gold to the consumer. The contract, GOLDHEDGE, is
available for trading from Jan 16, 2014. The one-kg gold
hedge contract provides a transparent platform for
investors with exposure to the international markets. The
final settlement prices is arrived at after taking into
account the gold price in dollar terms, rupee value against
dollar and the conversion ratio.
Launched Forward market in 25 September,2014 .

New Products

Index based products

Commodity Indices
Rainfall & other weather indices

Spread Trading
Electricity
Real Estate

Instruments to be introduced

Options
Provide up-side benefits to the market participants
Offer a market driven MSP to the farmers

Indices

Built-in diversification

Exchange for Physicals (EFPs)

Easy of trade for hedgers who would like to take or make

deliveries

..new instruments to attract new market participants

NCDEX 6th largest commodity exchange

in the world

At a time when other commodity exchanges are struggling to

stay afloat, National Commodity & Derivatives Exchange
Limited (NCDEX)'s market share has improved from 11 per
cent to 18 per cent in the past year.
NCDEXs average turnover has also moved up by 12.39 per
cent since the start of the financial year, compared to the same
period last year, to Rs 4,157.21 crore.

Source: UNCTAD, SFOA The worlds commodity exchanges 25, July,

2014

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Commodities in Real Life

Wheat in your bread
Petrol in your vehicle
Coffee on your table
Sugar in your sweets
Chana in your chhole
Gold in your necklace
and so on .
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Commodities are everywhere

Market Structure- Futures and Spot

State Government

Spot markets

Ministry of consumer
Affairs

Forward Markets
Commission

Futures Market

12

Regulatory Structure in India

Ministry of Finance

National
Housing Bank

Housing Finance
Companies

Insurance Regulatory Pension Funds Regulatory

Development Authority Development Authority
(IRDA)
(PFRDA)

Pension
Funds

Insurance

SIDBI

State Financial
Institutions

13

Ministry of Consumer
Affairs

Company
Law Board

Corporates

RBI

SEBI

Banking /
NBFCs

Capital
Markets

FMC

Commodity
Exchanges

NABARD

Co-operative Banks &

Regional Rural Banks

Structure of Indian Commodity Futures Exchanges

FMC
Commodity Exchanges
National
exchanges

NCDEX

14

NMCE

Regional
exchanges

MCX

NBOT

20 Other Regional
Exchanges

Classification of Commodities
Bullion
Gold
Silver
Palladium
etc

Agriculture
Grains
Pulses
Edible oils/seeds
Spices etc

Commodities

Base Metals
Copper
Zinc
Aluminum
Nickel
Tin

15

Energy
Crude oil
Heating oil
Natural gas
Furnace oil
Etc.

Going forward

16

Attracting new participants

Farmers
Offering them pre & post harvest risk mitigation platform
Ease of trade through aggregators

Banks
Role of aggregators
Proprietary trade

Mutual Funds

17

Attracting retail trade to the commodity exchanges

FIIs
FDIs

Our Shareholders
Institution
NABARD

ICICI Bank

18

Share
15 %

8%

Domain Expertise
Apex bank for agricultural lending

Largest private sector bank in India. Listed on NYSE

NSE

15 %

Largest stock exchange in India. Highest volume in single

stock futures in world.

LIC

15 %

Largest life insurance company in India

CRISIL

12%

Indias first & largest credit rating agency. Now a Standard &
Poor company

IFFCO

12%

Largest farmer cooperative with affiliation of 36,000

cooperatives

PNB

8%

Large public sector bank with strong rural reach specially in

North India

Canara Bank

8%

Large public sector bank with strong rural reach specially in

South India

Goldman
Sachs

7%

Global Expertise in commodity markets

Facilitation required

RBI Working Group Recommendations

Banks to be allowed to have proprietary positions in agricultural

commodity derivatives

Evolution of a system for warehouse receipts which would be freely

transferable

Banks to be granted general permission to become PCMs of commodity

exchanges

19

Foreign Access

20

Foreign access permitted in securities market- equities &

bonds under regulation

Currently can access commodity markets by setting up a

domestic entity for broking & investment

Require prior approval from FIPB

Precedents: Permission granted for Proprietary trade only

Price Dissemination
ELECTRONIC

PRINT

TV and radio

Regional newspapers

News agencies
Mobile phones
Integrated kiosk
Kisan (farmer) Call centres

Training material
Agri-journals

TICKER BOARDS
Member offices

Rural Post offices

Mandis
Banks rural branches
Rural warehouses
Bus stations

21

Future plans
Railway platforms
Co-operative offices
Panchayat offices

Contribution in global
landscape
Global Vs. India
Global commodity has relatively long
history
Size is 9 times larger than India

India
Commodity futures, though active since
19th century was banned later in 1970s
Commodity Trading ( Value in Million USD)
Commodity volumes shoots up
new
old
significantly after re-launch in 2003
Global
14831317 11712611
MCX emerged as worlds largest exchange
India
1469673
1067984
Volumes on Indian exchanges are
Source:FMC,Way2Wealth Research

22

increasing at CAGR of 73.7 percent

Returns in Indian commodities

23

Almost 45 commodities are available for trading in both NCDEX & MCX
Though few have been de-listed during high inflation times, re-listing also has
happened
Bullion, Base metals, energy & Agri are the major contributors in terms of
volumes

How to Invest
Procedure for Trading in Commodities
Open Demat & Trading A/C (Way2Wealth)
Filling KYC (Know Your Customer)
Documents required : Pan Card, Address Proof, Networth,
Cancelled cheque (MICR), Photo etc
To get familiar with this asset class, start reading research
reports and monitor advisory and execution
Acquire full knowledge of risk involved in futures

24

Mark to Market
Daily Pay-in & pay-out Day
Margin requirements

Key Facts:

25

NCDEX had 848 registered members and client base of @

20 Lakh as of 31 July 2013.
It offers trading on more than 49,000 terminals across
1,000 centers in India as of 31 July 2013.
It facilitates deliveries of commodities through a network
of over 594 accredited warehouses through eight
warehouse service providers, with holding capacity of
around 1.5 million tonns.
It offers average deliveries of 1 lakh MT at every contract
expiry. Average delivery ratio for Q1 of 2013-14 is 98%.

Risk Management Role of an

Exchange

Anonymous auction platform

Price Discovery by matching of demand-supply

Neutrality - conflict of interest avoided

Transparent real time, pan-geographic price discremination
Benchmark reference price
Liquidity to participants

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Role of an Exchange

Standardized specifications - contract structure

Standard margining system

Eliminates credit rating

Risk Management in a volatile market

Robust Clearing & Settlement systems - counter party credit
risk absorbed
Fair, Safe, orderly market - rigorous financial standards and
surveillance procedures

27

Bibliography:

28

www.mcx.com
www.nscindia.com
www.ncdex.com/introduction
www.google.com/ncdex
www.en.wikipedia.org/ncdex

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