47% of GDP is Commodity related 23% of GDP is from Agriculture

1. Growth In Indian Commodity MarketGrowth In Indian Commodity Market
1

2. 2
 47% of GDP is Commodity related
 23% of GDP is from Agriculture
 Over 65% of 1 trillion population depend on
agriculture directly
 Over 7500 physical market yards with best Silver
MCXtips
 History of more than 150 years of derivatives trading
Why Commodity Exchange in IndiaWhy Commodity Exchange in India

3. 3
Why Commodity Exchange in IndiaWhy Commodity Exchange in India
 Largest producer / consumer of:
 Bullion
 Oilseeds
 Pulses
 Sugar
 Cotton
 Spices
 Economy growing at the rate of 8%

4. 4
Evolution of Commodity markets in IndiaEvolution of Commodity markets in India
 Ban in forward trading from mid-sixties
 Prior to ban
 Thriving commodity exchanges for cotton, gold, edible oils
etc.
 more than 20 regional commodity specific exchanges
 Recent developments
 Ban completely lifted in 2003
 Emergence of national level de-mutualised online multi-
commodity exchanges
 3 National and 21 regional exchanges
 Trade in 60 commodities compared with just 8 in 2000
 Growth exceeds 4 times in FY05 over FY04
Traded volume in 2004-05 around 20% of India’s GDP

5. 5
Growth in volumes of Indian Commodity ExchangesGrowth in volumes of Indian Commodity Exchanges
1 ,2 9 4
4 5
6 6 5
5 ,7 1 0
0
1 ,0 0 0
2 ,0 0 0
3 ,0 0 0
4 ,0 0 0
5 ,0 0 0
6 ,0 0 0
2 0 0 1 -0 2 2 0 0 2 -0 3 2 0 0 3 -0 4 2 0 0 4 -0 5
Rs bn
Impressive growth of 341 % between 2003-04 to 2004-05
1 USD= Rs 43

6. 6
Choice of Product: CalculatorChoice of Product: Calculator
 Parameters considered
 Price volatility
 Share in GDP
 Correlation with global markets
 Share in external trade
 Government intervention
 Warehousing facilities
 Traders distribution
 Geographical spread
 Number of varieties
Only Physical commodities allowed in Commodity Exchanges

7. 7
Contract SpecificationsContract Specifications
 Rigorous Product Research
 Linking entire value chain
 Underlying specifications identification
 Proxies- Benchmarking to all other varieties
 Identification of location basis
 Location premium & discount
 Grade premium & discount

8. 8
Challenges aheadChallenges ahead
 From open outcry to online
 Discipline trading environment
 Nuances of Physical settlement
 Educating about free commodity tips
 To bring actual users on the exchange platform
 Farmers
 Corporate
 Investors

9. 9
Generating liquidityGenerating liquidity
 Involvement of all value-chain entities in contract
formulation
 Relationship group provides relentless momentum
 Generates interests of all members & clients
 Awareness Programmes
 Wide media coverage
 Easy access to Exchange information
 Market to be opened up for banks, fund houses and
Foreign Investors

10. 10
Foreign AccessForeign Access
 Foreign access permitted in securities market-
equities & bonds
 Foreign investment regulation for investment in
commodity derivatives – a committee constituted by
the regulator
 Currently can access by setting up a domestic entity
– for broking & investment

11. 11
Options tradingOptions trading
 Options allowed in securities market
 Single Stock options
 Index Options
 Interest rate Options
 Currency Options
 Options not yet permitted in the commodity markets
 Law to be amended shortly
 Informal options trading prevalent

12. 12
Regulatory EnvironmentRegulatory Environment
 Separate regulator for capital markets & commodity
markets
 Capital Markets
 Securities Exchange Board of India (SEBI)
 Autonomous body
 Under Ministry of Finance
 Commodity Markets
 Forward Markets Commission (FMC)
 Part of Ministry of Consumer Affairs
 Law being amended to make it autonomous body

13. 13
About NCDEXAbout NCDEX

14. 14
NCDEX – Current shareholdersNCDEX – Current shareholders
15%
8%15%15%
12%15% 12%
8%

15. 15
Gold, Silver,Gold, Silver,
Crude PalmCrude Palm
oil, RBDoil, RBD
Palmolein,Palmolein,
Cotton,Cotton,
MustardMustard
seed,seed,
Mustard oilMustard oil
Soybean,Soybean,
Refined soyRefined soy
oiloil
Gold, Silver,Gold, Silver,
Crude PalmCrude Palm
oil, RBDoil, RBD
Palmolein,Palmolein,
Cotton,Cotton,
MustardMustard
seed,seed,
Mustard oilMustard oil
Soybean,Soybean,
Refined soyRefined soy
oiloil
Guarseed,Guarseed,
JuteJute
sacking,sacking,
Chana,Chana,
Rubber,Rubber,
Pepper,Pepper,
Wheat,Wheat,
Castorseed,Castorseed,
Guargum,Guargum,
Raw jute,Raw jute,
Urad, YellowUrad, Yellow
peas, Sugar,peas, Sugar,
Turmeric,Turmeric,
SoymealSoymeal
Guarseed,Guarseed,
JuteJute
sacking,sacking,
Chana,Chana,
Rubber,Rubber,
Pepper,Pepper,
Wheat,Wheat,
Castorseed,Castorseed,
Guargum,Guargum,
Raw jute,Raw jute,
Urad, YellowUrad, Yellow
peas, Sugar,peas, Sugar,
Turmeric,Turmeric,
SoymealSoymeal
Gur, Rice,Gur, Rice,
Maize, RawMaize, Raw
silk, Cocoon,silk, Cocoon,
Jeera, Chilli,Jeera, Chilli,
Steel,Steel,
Cashew,Cashew,
CottonseedCottonseed
oilcake,oilcake,
SesameSesame
seed, Tur,seed, Tur,
Arabica &Arabica &
RobustaRobusta
Coffee,Coffee,
CopperCopper
CathodeCathode
Gur, Rice,Gur, Rice,
Maize, RawMaize, Raw
silk, Cocoon,silk, Cocoon,
Jeera, Chilli,Jeera, Chilli,
Steel,Steel,
Cashew,Cashew,
CottonseedCottonseed
oilcake,oilcake,
SesameSesame
seed, Tur,seed, Tur,
Arabica &Arabica &
RobustaRobusta
Coffee,Coffee,
CopperCopper
CathodeCathode
Dec 2003
Apr-Dec 2004 Jan – Jun
2005
OtherbaseOtherbase
Metals,Metals,
EnergyEnergy
Products,Products,
MoreMore
AgriculturalAgricultural
productsproducts
OtherbaseOtherbase
Metals,Metals,
EnergyEnergy
Products,Products,
MoreMore
AgriculturalAgricultural
productsproducts
In pipeline
Product CalendarProduct Calendar
Each product is selected afteran in-depth research & market feedback
Indices-Indices-
NCDEXAGRINCDEXAGRI
FUTEXAGRIFUTEXAGRI
NCDEXRAINNCDEXRAIN
Indices-Indices-
NCDEXAGRINCDEXAGRI
FUTEXAGRIFUTEXAGRI
NCDEXRAINNCDEXRAIN

16. 16
Average daily volumesAverage daily volumes
210 550
6910
12310
16190
12290
14440
20150
22310
20950
25750
30400
0
5000
10000
15000
20000
25000
30000
35000 Q1-2004
Q2-2004
Q3-2004
Oct-Nov04
Dec-'04
Jan'05
Feb'05
Mar'05
Apr'05
May'05
June'05
July'05
Rs mn
PeakVolume for a single day
Rs. 47200 mn on Jul ‘05
Impressive growth of NCDEXwith 85% volume contribution fromagriculture
Volumes in Steel & Copperpicking up- daily average steel trade- 10,000 tonnes