NSE, the country’s largest stock exchange, has filed papers with market regulator SEBI to launch a commodity exchange on October 1. The exchange will initially focus on less complex non-agriculture commodity futures and move on to agri commodity futures over time.

NSE’s latest venture poses a challenge to MCX, currently the largest commodity exchange with an over 90 market share of the non-agri commodity futures market. BSE has also scheduled its commodity trading debut for October 1.

Though SEBI permission to launch a commodity exchange is just a formality, NSE has to seek its approval for specific products and contract design. The exchange will launch trading in bullion, energy and base metals on October 1 while product approvals have also been sought for some agri commodities, said sources.

Stake in NCDEX

Interestingly, NSE holds a 15 per cent stake in NCDEX, which specialises in agri commodity futures trading. This will not hinder NSE’s latest plans, as it doesn’t hold any board seat in NCDEX, the sources clarified.

NSE is said to be in merger talks with MCX but sources said these are early days yet. “If there are merger talks why would the exchange launch a commodity platform on its own? Moreover, the merger of publicly-owned MCX with non-listed NSE is a complex issue, particularly when NSE itself is planning an IPO,” said a market analyst.

The commodities exchange space has gathered momentum over the past two years. In the first ever merger of two regulators, the over 60-year-old commodities regulatory body Forward Markets Commission was amalgamated with SEBI in 2015, paving the way for a unified trading platform for commodity derivatives and equities.

Late last year, SEBI also issued unified licences for brokers to trade in both the asset classes. This will not only widen the commodity market reach but also enable investors to trade in both equity and commodity with a single margin pool.

Moreover, SEBI, from October, is extending the trade timing of equity derivatives till 11.55 pm, a move that will help bourses sync their operations with those that trade internationally linked commodities.