India's National Commodity and Derivatives Exchange, the country's largest agricultural commodities trading venue, is gearing up to launch equity and equity derivatives trading on its platform after receiving preliminary approval from the country’s markets regulator this summer. NCDEX is the latest Indian exchange to expand to this asset class.
NCDEX expects final approval from the Securities and Exchange Board of India by the end of the year, subject to fulfilling technical, compliance and operational prerequisites laid out by the regulator, with plans to launch by August of next year, according to NCDEX Chief Executive Arun Raste. The launch will begin with the equity cash segment, followed by equity derivatives.
Earlier this month, NCDEX raised 7.7 billion rupees (USD $88 million) in capital to help facilitate its entry into the new market. According to reports, investors include global trading firms Citadel Securities and Tower Research, several major domestic Indian brokers, the US-based investment firm Acacia Partners, and a group of high-net-worth individuals.
Citadel Securities and Tower Research are reportedly taking minority stakes of between 1% and 2% each in the capital raise, marking the first such investment in the country by global market makers. For Citadel Securities, the deal will deepen its presence in India, where it started operations in 2022. Tower Research expanded its operations into India in 2023.
The investments highlight how India’s stock exchanges continue to attract strong investor appetite, despite the introduction of tighter regulations on speculative activity in the equity options market over the past year. A raft of measures introduced by SEBI has resulted in a 75% drop in options trading on Indian exchanges in the first five months of 2025, according to FIA data. SEBI tightened trading rules further in July and temporarily barred US trading firm Jane Street over alleged manipulation.
While trading volumes have decreased in the segment, NCDEX sees potential for expansion due to its vast rural customer base. In particular, the exchange says it views equity access as a way to widen participation so that farmers, cooperatives and rural savers can actively and more easily participate in India’s capital markets.
“SEBI’s in-principle approval marks an important step in the exchange’s journey as it expands its platform to connect grassroots savings with regulated investment opportunities,” the exchange said in a statement. “NCDEX aims to offer ‘Equity for Bharat’ – safer, transparent and long-term wealth-building options to millions currently outside the equity fold and help them create wealth from the development of the equities market."
Diversification
NCDEX holds approximately 97% of the market share in agricultural derivatives, but its core business has faced several challenges in recent times, necessitating the need for diversification. Earlier this year, SEBI extended its ban on futures trading in seven major agricultural commodities in a bid to control rapidly spiralling food prices. The suspension has led to a significant drop in average daily revenues at the exchange.
NCDEX says the initial product suite will include equities, followed by equity derivatives. Over time, it will introduce sector-focused products to meet the needs of new investors and enterprises seeking to raise capital.
“These could, subject to regulatory approvals, include exchange-traded funds such as FPO-basket ETFs that will allow retail investors to invest in the collective performance of Farmer Producer Organisations, it said. “The exchange also envisions future instruments like Agri Infrastructure Real Estate Investment Trusts to channel long-term capital into key infrastructure – including warehouses, cold chains, and logistics – helping reduce post-harvest losses and ensuring better returns for produce.”
The move will pit NCDEX against the dominant exchanges, the National Stock Exchange of India, by far the largest, and its rival, the Bombay Stock Exchange.
The Metropolitan Stock Exchange also has an equities segment and last month raised 10 billion rupees ($113.5 million) to bolster the business. In a statement, MSE said it is poised to deepen market liquidity in equity cash, followed by the derivatives segments “very soon.”
