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The National Commodity and Derivatives Exchange (NCDEX), India's premier agricultural commodity exchange, is actively pursuing initiatives to develop commodity derivatives markets in Iran and Nepal. This strategic move follows its recent collaboration with the Colombo Stock Exchange (CSE) in Sri Lanka, aiming to leverage its expertise in commodity trading to foster regional market development.
Strengthening Regional Ties
In January 2025, NCDEX signed a Memorandum of Understanding (MoU) with the Colombo Stock Exchange to collaborate on developing derivatives and commodity products in Sri Lanka. This partnership encompasses knowledge-sharing initiatives, technological support, and capacity-building programs focused on technology, systems, and regulations. The collaboration aims to enhance product offerings and trading instruments at CSE, contributing to a sustainable and efficient trading ecosystem.
CEO Arun Raste's Vision
Arun Raste, Managing Director and CEO of NCDEX, emphasized the importance of growth and diversification for the exchange. He stated that while current international collaborations are primarily pro bono, there is an intention to monetize these partnerships as NCDEX gains more experience and expertise.
Raste highlighted that Iran and Nepal present unique opportunities: Iran, with its trading in oil, saffron, and nuts, and Nepal, which lacks a fully developed commodities derivatives exchange. NCDEX is in preliminary talks with the Iran Mercantile Exchange and is exploring opportunities in Nepal, where local regulators are considering establishing a commodity exchange.
Financial Performance and Strategic Investments
NCDEX has faced financial challenges recently, with a significant drop in average daily revenues due to the suspension of futures in seven major agricultural commodities. Towards the end of FY24, the exchange's average daily turnover declined to approximately ₹1,100–1,200 crore from ₹2,600 crore before the ban.
In Q3 FY25, NCDEX reported a consolidated net loss of ₹11.61 crore, an increase from ₹10.91 crore in the same quarter of the previous year. However, this marked a sequential improvement from a net loss of ₹15.04 crore in Q2 FY25. Revenue from operations in Q3 FY25 fell by 4.93% year-on-year to ₹21.59 crore but increased by 10.6% from the previous quarter.
To diversify its offerings and reduce reliance on agricultural commodities, NCDEX's board has approved the launch of equity and equity derivatives segments, planning an investment of ₹400–600 crore. This strategic expansion aims to build a robust infrastructure for new market segments, potentially bringing significant advantages to its existing agriculture-focused market.
Looking Ahead
NCDEX's initiatives in Iran and Nepal, along with its partnership with Sri Lanka's CSE, reflect its commitment to expanding its footprint and sharing expertise in commodity derivatives trading. By fostering regional collaborations and diversifying its product offerings, NCDEX aims to strengthen its position in the global commodities market and contribute to the development of efficient trading ecosystems in neighboring countries.
