PRESENTATION ON NCDEX PLATFORM OF COMMODITY AND FINANCIAL DERIVATIVESSubmitted To:- Submitted By:-Miss Aanchal Mam Neha (09) (Assistant Professor) Mohit (29) USM KUK MBA SFS Final 2015

ContentsAbout NCDEXProduct & ServicesMarket StructureClassification of CommoditiesShareholders/ MembershipRisk ManagementHow to InvestKey Facts *

*About NCDEX

It is an onlinecommodity exchange based inIndia. 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 theCompanies Act,1956.It obtained itsCertificate 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 theForward Markets Commission(FMC), and is subject to theCompanies Act 2013, Stamp Act, Contracts Act, Forward Commission (Regulation) Act, and various other laws.NCDEX has offices inMumbai,Delhi,Ahmedabad,Indore,Hyderabad,Jaipur, andKolkata.[

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Products & Services:-NCDEX offers futures trading in 31 agricultural and non-agricultural 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 liquidcommodity futurestraded on the NCDEX platform. Dhaanya aims to provide a reliable benchmark for India's agri-commodities.IntroducedN-Charts a free, web-based charting tool provided to users for technical analysis.*

Cont.Launched COMTRACK - a proprietary electronic warehouse accounting systemLaunched GOLD HEDGE, a transparent price benchmark ofgoldto 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,rupeevalue against dollar and the conversion ratio.Launched Forward market in 25 September,2014 .

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*New Products Index based productsCommodity IndicesRainfall & other weather indicesSpread TradingElectricityReal Estate

*Instrumentsto be introducedOptionsProvide up-side benefits to the market participantsOffer a market driven MSP to the farmers

IndicesBuilt-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 worldSource: UNCTAD, SFOA The worlds commodity exchanges 25, July, 2014At 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.

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 .

Commodities are everywhereCommodities in Real Life*

*Market Structure- Futures and SpotSpot marketsFutures MarketForward Markets CommissionMinistry of consumer AffairsState Government

*Regulatory Structure in IndiaBanking / NBFCsRBIMinistry of FinanceSEBICapital MarketsNABARDCo-operative Banks & Regional Rural BanksMinistry of Consumer AffairsFMCCommodity ExchangesInsurance Regulatory Development Authority(IRDA)InsurancePension FundsSIDBIState Financial InstitutionsNational Housing BankHousing Finance CompaniesCompany Law BoardCorporatesPension Funds Regulatory Development Authority(PFRDA)

*20 Other Regional Exchanges

NMCE

Commodity ExchangesMCX

Structure of Indian Commodity Futures ExchangesNational exchangesRegional exchangesFMCNBOT

NCDEX

Classification of Commodities*

*Going forward

*Attracting new participantsFarmers Offering them pre & post harvest risk mitigation platformEase of trade through aggregatorsBanksRole of aggregatorsProprietary tradeMutual FundsAttracting retail trade to the commodity exchangesFIIsFDIs

*Our Shareholders

InstitutionShareDomain ExpertiseNABARD15 %Apex bank for agricultural lending ICICI Bank8 %Largest private sector bank in India. Listed on NYSENSE15 %Largest stock exchange in India. Highest volume in single stock futures in world.LIC15 %Largest life insurance company in India CRISIL12%Indias first & largest credit rating agency. Now a Standard & Poor companyIFFCO12%Largest farmer cooperative with affiliation of 36,000 cooperativesPNB8%Large public sector bank with strong rural reach specially in North IndiaCanara Bank8%Large public sector bank with strong rural reach specially in South IndiaGoldman Sachs7%Global Expertise in commodity markets

*Facilitation requiredRBI Working Group RecommendationsBanks to be allowed to have proprietary positions in agricultural commodity derivativesEvolution of a system for warehouse receipts which would be freely transferable Banks to be granted general permission to become PCMs of commodity exchanges

*Foreign AccessForeign access permitted in securities market- equities & bonds under regulationCurrently can access commodity markets by setting up a domestic entity for broking & investmentRequire prior approval from FIPBPrecedents: Permission granted for Proprietary trade only

*Price Dissemination

ELECTRONICPRINT TV and radio News agencies Mobile phones Integrated kiosk Kisan (farmer) Call centres Regional newspapers Training material Agri-journalsTICKER BOARDSFuture plans Member offices Mandis Banks rural branches Rural warehouses Bus stations Rural Post offices Railway platforms Co-operative offices Panchayat offices

Contribution in global landscapeGlobal 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 1970sCommodity volumes shoots up significantly after re-launch in 2003MCX emerged as worlds largest exchangeVolumes on Indian exchanges are increasing at CAGR of 73.7 percent newoldGlobal1483131711712611India14696731067984Source:FMC,Way2Wealth ResearchCommodity Trading ( Value in Million USD)*

Returns in Indian commoditiesAlmost 45 commodities are available for trading in both NCDEX & MCXThough few have been de-listed during high inflation times, re-listing also has happenedBullion, 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

Mark to MarketDaily Pay-in & pay-out DayMargin requirementsContract expiry Leverage, profit & loss etc

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Key Facts:-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%.

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*Risk Management Role of an Exchange

Anonymous auction platformPrice Discovery by matching of demand-supplyNeutrality - conflict of interest avoidedTransparent real time, pan-geographic price discremination Benchmark reference price Liquidity to participants

*Role of an Exchange Standardized specifications - contract structureStandard margining systemEliminates credit ratingRisk Management in a volatile market Robust Clearing & Settlement systems - counter party credit risk absorbedFair, Safe, orderly market - rigorous financial standards and surveillance procedures

Bibliography:-www.mcx.comwww.nscindia.comwww.ncdex.com/introductionwww.google.com/ncdexwww.en.wikipedia.org/ncdex*

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