Zee Business Exclusive: SEBI's nod on NSE-NCDEX merger likely to come soon; avenues for agri-commodities to grow significantly

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India’s largest agriculture commodity index the National Commodity and Derivatives Exchange Limited will be merged with the National Stock Exchange (NSE). Sources close to Zee Business have said that market regulator Securities and Exchange Board of India (SEBI) is expected to give its consent within this week. Zee Businesses’ Tarun Sharma has this exclusive report. 

India’s two biggest exchanges in the equity and agri-commodity segment will be merged. A clearance from SEBI is likely to come any time soon…probably within this week, he added. This merger will be a big booster for the agri-commodities.  

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He said that agri-commodities were not doing a good business on NCDEX due to various reasons. One was inflation and the government watched this space closely.  NSE has significant cash at its disposal.

Both, foreign and domestic institutional investors trade on it which offers a big opportunity for agri-products to trade on it.  

Institutions like LIC, IFFCO and NABARD each have stakes in NCDEX. State-run Punjab National Bank and Canara Bank each also have 5 per cent shares in the NCDEX. 

The discussions on this were ongoing for over two years now and SEBI wanted formation of a subsidiary. 

The approval process from SEBI is in its final stages, he added. 

It is a view that in order to develop the agri-commodities market, a strong enabler is needed in the form of NSE. 

Once SEBI gives its consent for merger, the exchanges will be required to get a clearance from NCLT. 

He said that the decks for its approval from SEBI have already been cleared and this could come anytime.  

Calling this a big development, Narendra Wadhwa, President of Commodity Participants Association of India (CPAI) said that the SEBI’s nod augurs well for the development of the agri-commodity segment. He said that the agri-commodity segment is big and carries a lot of potential. The exchange was created for the development of this segment. 

Merger with the NSE will be a big plus for the agri-commodty and derivatives segment.  

The trading volumes of agri-commodities on the exchanges have reduced and many commodities have even been banned from trading.  

Sharma said that agri-commodities have been trading with limitations. This will open opportunities for expansion.  

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Exchange will facilitate price discovery of agri-commodities that could improve farm incomes, he further said. 

(Disclaimer: The views/suggestions/advices expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)