MUMBAI: India’s largest farm derivatives exchange, National Commodity & Derivatives Exchange Ltd (NCDEX), has appointed Tata Consultancy Services (TCS) as its technology vendor, as the bourse prepares to enter the equities market.
India’s largest software exporter will build the IT systems required for NCDEX to launch an equity cash segment by the end of 2026 and an equity derivatives segment by March 2027.
"We have appointed TCS as our tech vendor," Arun Raste , MD & CEO of NCDEX told Mint . “We will launch equity cash by the end of the current calendar year and equity derivatives by the end of the next fiscal year (FY27).”
TCS was selected after a four-month process involving contenders including Nasdaq, London Stock Exchange Group and Swiss-controlled Aquis. TCS shares ended 2.11% lower at ₹2,692.2 apiece on Friday. The company is also the technology vendor for MCX, the country’s largest metals and energy exchange.
NCDEX received approval from the Securities and Exchange Board of India (Sebi) early last year to launch equity cash and equity derivatives segments.
To finance the new platforms and related services, NCDEX raised ₹770 crore through a preferential allotment to 61 investors in September last year. Investors included Kotak Life Insurance, JM Financial, high-net-worth individuals such as Madhu Kela and Ramesh Damani, stockbrokers including Share India and Globe, and foreign high-frequency traders such as Optiver and Citadel Securities.
The 40% preferential issuance diluted holdings of existing investors, including the National Stock Exchange (NSE), which held 15%, and Life Insurance Corp. (LIC) and Nabard, which held 11.1% each, to below 10% each, Raste said.
Apart from NCDEX, Indian exchanges offering commodity derivatives include MCX, National Stock Exchange (NSE) and BSE. India’s commodity derivatives turnover stood at ₹568 trillion in FY25, with MCX accounting for 99.5% market share, according to Sebi data.
Interest in launching an equity derivatives platform gathered pace after Sebi, in October last year, restricted weekly equity index options expiries to one per exchange, compared with multiple expiries earlier. Effective September this year, exchanges were allowed to choose one of two expiry days – Tuesday or Thursday.
NSE opted for Tuesday expiries, while BSE shifted to Thursday from Tuesday in September, intensifying competition for any new entrant seeking market share in equity index options.
"NSE-backed NCDEX has raised funds for launching new equity cash and derivatives segments, in the hope that some of the IPO-bound companies might list on their new platform. It's like an annuity business with listing fees for companies that vary from ₹3 lakh to ₹4 lakh each a year," said a broker.
NCDEX began operations in 2003 after Atal Vajpayee-led National Democratic Alliance government reintroduced commodity derivatives trading following a four-decade ban. The exchange currently sees strong delivery in spices and the guar complex and plans to relaunch pepper and potato derivatives contracts.
In 2007, trading in pulses and rice futures was banned by the United Progressive Alliance government following sharp price rises linked to supply constraints.