NCDEX

How SEBI Regulates National Commodity & Derivatives Exch. Limited (NCDEX) In India?

NCDEX

The Securities & Exchange Board of India is the leading organisation that oversees the functioning and regulation of the commodity and derivatives market. Multiple exchanges function under this market, namely:

1. Multi Commodity Exchange of India (MCX)

2. National Commodity and Derivatives Exchange Limited of India (NCDEX)

3. National Multi Commodity Exchange (NMCE)

4. Indian Commodity Exchange (ICEX)

5. ACE Derivatives & Commodity Exchange Limited

6. Universal Commodity Exchange Limited.

Of all these Exchange boards, the National Commodity and Derivatives Exch. Limited of India (NCDEX) is one of the most talked about commodities exchange boards. SEBI has defined a list of rules that the commodities exchange must abide by. Before looking at how SEBI regulates NCDEX, let us have a brief understanding of NCDEX. 

NCDEX: An Introduction

National Commodity & Derivatives Exchange Limited (NCDEX), incorporated on April 23, 2003, is a commodity exchange that offers a benchmark of agriculture and non-agriculture-related commodities derivatives segment. The exchange board is a publicly listed company and is an online commodities and derivatives exchange in India. 

NCDEX is primarily concerned with the trading of agricultural commodities, and it allows agricultural commodities to be bought and sold like derivatives and securities in the trading market. The exchange board is a step forward in bringing the most dominant sector of the Indian economy into the mainstream trading landscape so that traders can capitalise and make profits by trading in various agricultural commodities. 

Benefits That NCDEX Provides: 

There are multiple benefits that the exchange board leverages for its traders and the people associated with Indian agriculture: 

  • The exchange board is a step forward in improving transparency within the agricultural sector, as it has increased the awareness amongst Indian farmers pertaining to the accurate price of their products. 
  • It acts as a mediator between the seller, who wants to reduce the uncertainty by selling the agricultural produce at a fixed price in the future, and the buyer, who wants to earn profits by buying agricultural commodities. 
  • NCDEX has also increased quality awareness among farmers. As the exchange board has made specific quality standards according to which the price of the commodities will be decided. So farmers have started to improve the standards and focus on testing requirements to deliver high-quality crops. 
  • The market exchange has brought about certainty and reduced fluctuations and risk as NCDEX provides the farmers with a hedge, depending on their risk-bearing capacity. 

These services and benefits that the National Commodity & Derivatives Exchange Limited provides not only improve the quality of produce by the Indian farmers but also ensure that the investors get the right price and profits for their investments. Currently, NCDEX deals in 23 commodities, including pulses, spice and guar, which are not traded on any other platform globally and are relevant to the Indian agricultural landscape. NCDEX controls around 75-80% of the trading related to agricultural items and is regulated under the Securities & Exchange Board of India (SEBI). Let us see how these laws govern the functioning of NCDEX and indirectly affect the prices of National Commodity & Derivatives Exch. Limited (NCDEX) shares.

How Does SEBI Regulate NCDEX? 

The Securities & Exchange Board Of India started regulating the commodities market in 2015, as the previous governing organisation, Forward Market Commission or FMC failed at the task of handling the market amidst the scam of the National Spot Exchange (NSEL) in 2013 and significant functioning and regulation loopholes were detected in the organisation’s functioning. The Exchange Board provides a standard agreement on which the functioning of each commodities exchange depends. 

After 2015, SEBI was responsible for regulating and looking over the functioning of the commodity market. To supervise the functioning and operations of the Commodity Derivatives Market, a separate division of SEBI, The Commodity Derivatives Market Regulation Department, oversees the general functioning. The department has allotted respective divisions to monitor and regulate the market, namely: 

  • Division of Exchange Administration.
  • Division of Complaints
  • Division of Investor Awareness -1
  • Division of Investor Awareness -2
  • Division of Market Policy
  • Division of New Products
  • Division of Risk Management
  • Division of Products
  • Division of Inspection

Talking about NCDEX specifically, SEBI regulates it, and the functioning is governed under various laws and regulations, including:

  • Securities Contracts (Regulation) Act, 1956, Companies Act, 
  • Securities Contracts
  • Regulations, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 
  • Stamp Act, 
  • Contract Act and various other legislations.

The regulation of the exchange board by SEBI gives additional trust to the investors and shareholders to buy National Commodity & Derivatives Exchange Limited (NCDEX) unlisted shares. If you want to buy and sell unlisted shares to make a profit, Stockify can be the best platform to start with! Connect with the experts and start your trading journey today. 

Frequently Asked Questions: 

Q1. What is the price of the National Commodity & Derivatives Exchange Limited (NCDEX) unlisted shares? 

Currently, the National Commodity & Derivatives Exchange Limited (NCDEX) unlisted shares trade at Rs. 400 per share. For the latest price updates of unlisted shares, you can visit Stockify. 

Q2. Is it legal to buy and sell National Commodity & Derivatives Exchange Limited (NCDEX) unlisted shares in India? 

Buying and selling National Commodity & Derivatives Exchange Limited (NCDEX) unlisted shares are legal in India. In fact, you can buy National Commodity & Derivatives Exchange Limited (NCDEX) unlisted shares on Stockify, one of the leading platforms to buy and sell unlisted shares. 

Q3. Are National Commodity & Derivatives Exchange Limited (NCDEX) shares available in the primary market? 

NCDEX has got approval from the Securities & Exchange Board Of India to launch an IPO, after which it will be available for trading in the primary market. 

Q4. Where can I buy and sell National Commodity & Derivatives Exchange Limited (NCDEX) unlisted shares? 

You can get access to the National Commodity & Derivatives Exchange Limited (NCDEX) unlisted shares on Stockify, one of the leading platforms to buy and sell unlisted shares in India. 

Q5.What is the issue size of the National Commodity & Derivatives Exchange Limited (NCDEX) shares? 

The issue size of National Commodity & Derivatives Exch. Limited (NCDEX) shares are Rs.500 cr.

Table of Contents

NCDEX, a part of the commodities market, is governed by SEBI. Let’s look at the rules & regulations the Exchange has to follow.

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