Looking for Low Brokerage, High Margin & Free Tips?
MCX and NCDEX
| | Share Market | No Comments
More On Share Market
When it comes to commodity tradingĀ MCX and NCDEXĀ are the two leading names. These two are the famous commodity exchange of India that play a vital role in commodity trading and give an opportunity to traders to earn good profit.
Commodities like food, oil, and metals play an important role in everyday life. The price of these commodities fluctuates in the market at a fast rate thus impacting the users significantly.
To keep track of such fluctuations and help traders to earn good money from these commodities, commodity trading is gaining great fame.
In all, commodities are the way to diversify the portfolio beyond the traditional securities in the long run. Also, it plays a vital role to park cash during the volatile and bearish stock market.
Considering the commodity market, it is the foundation of the global trade system that allows the trader to earn a lot of profit if done strategically.
For carrying out the commodity exchange one need the commodity exchange. It is a legal entity that helps in determining and enforcing rules for carrying out the commodity trade in a standardized way.
Also, a commodity exchange is defined as a physical place where one can carry out the trade. Each day the trading of more than trillions of dollars takes place in the commodity market.
The traders in the commodity market do not deliver any physical commodities, in fact, they trade in futures contracts in which the buyers and sellers agree on the particular price in which the commodity will be sold at a specific time.
At present India has four commodity exchange enlisted below:
- National Commodity and Derivative Exchange (NCDEX)
- Multi Commodity Exchange (MCX)
- Indian Commodity Exchange (ICEX)
- National Multi-Commodity Exchange (NMCE)
Here we will study the compare the MCX and NCDEX stock exchange and understand the difference between the two. Before comparing the two exchanges, grab the knowledge of the two dominating commodity exchanges of the country.
NCDEX
NCDEX or National Commodity & Derivative Exchange Limited is an online multiĀ commodity trading exchange that allows trading in agriculture commodities like oil, wheat, soybean, etc.
The commodity trade in the exchanges helps traders to earn maximum profit and also provide peace of mind to farmers who often remain worried about the price fluctuations and loss.
It has the same stock market timing as the rest of the exchanges, including the MCX.
MCX
MCX or Multi Commodity Exchange is another commodity exchange that opens the gateway to trade-in gold, silver, and other precious commodities thus offering a big return in trading.
In all, MCX provides a platform for options like bullion, energy, non-ferrous metal, and other agriculture commodities are being traded.
Similarities Between MCX and NCDEX
Both MCX and NCDEX comes into operation in 2003 with their headquarter in Mumbai. Both commodity exchanges use state-of-art technologies that facilitate faster and error-free trading for the traders.
Both the exchanges operate on weekdays i.e. from Monday to Friday. Also, both the exchanges offer an online trading platform that can be accessed by all the members via computer to computer link (CTCL) and trader workstation that is connected with VPN, VSAT, leased lines and internet.
Both MCX and NCDEX trade in standardized contracts. Thus the lot size, the quality of a commodity meant for delivery and the expiry dates are standardized.
Like the NSE and BSE, both MCX and NCDEX get the transaction and trade by the clearing corporation thus eliminating the counterparty risk.
MCX and NCDEX allow trading of margins thus allowing traders to take a larger position on their capital by putting a margin.
Difference Between MCX and NCDEX
Although both the MCX and NCDEX are platforms that deal with the commodity trade, they have a few differences in terms of the commodity they trade-in.
MCX on the one hand trade in commodities like gold, silver, and other traded metals, NCDEX, on the other hand, offers the best investment returns by trading in agri-based products.
Here are the differences between the two commodity exchanges.
Although the major difference between the two commodity exchanges is the commodity in which they trade, there are many other differences in terms of promoters and shareholders, clearing banks, etc.
On one hand, NCDEX was established in AprilĀ 2003 while the MCX become active in November 2003.
NCDEX is the only exchange in India that is promoted by the ICICI Bank Ltd, LIC, NABARD, and NSE.
MCX, on the other hand, is promoted by National Spot Exchange Ltd (NSEL), Singapore Merchantile Exchange (SMX), Bahrain Financial Institution (BFX), Global Board of Trade (GBOT), etc.
Other than this both the exchanges have different numbers of clearing banks. NCDEX has 15 while MCX has 16 banks that have been empanelled as the clearing banks.
| Clearning Banks | NCDEX | MCX |
| Axis Bank Ltd |  | |
| Bank of India | | |
| Canara Bank | | |
| Citibank n.a. |  | |
| Corporation Bank | | |
| Development Credit Bank Ltd. | | |
| Dhanlaxmi Bank | | |
| HDFC Bank Ltd | | |
| ICICI Bank Ltd | | |
| Indusind Bank | | |
| Kotak Mahindra Bank | | |
| Punjab National Bank | | |
| State Bank of India | | |
| Tamil Nadu Merchantile Bank Ltd | | |
| Standard Charted Bank Ltd | | |
| Union Bank of India | | |
| Yes Bank | | |
Also, along with it know the difference between BSE and NSEĀ in an easy way.
Conclusion
On the whole, it can safely be concluded that since NCDEX and MCX deal in different commodities, they cannot be straight away classified or judged against each other. The type of commodity to be traded should determine the platform and not the other way round.
Every sensible investor should, in fact, become members of both Exchanges to make the most of a good market and to curb losses relatively when markets are down.
Considering the volatile nature of the global markets at present, trading should be distributed among various commodities and hence various commodity trading exchanges.
In case you are looking to invest or trade in commodities via MCX and NCDEX or any other related exchange, let us assist you in taking the next steps forward:
If you are looking to know more about the Indian Share Market basics, here are some reference tutorials for you: