NCDEX Plans to Acquire 20% Stake in Sri Lanka’s New Commodity Exchange

India’s National Commodity & Derivatives Exchange (NCDEX) is preparing to enter the Sri Lankan market with a proposed 20% stake in CSEDEX, a new commodities and financial derivatives exchange being established by the Colombo Stock Exchange (CSE), as per the news reports.  

The move marks a rare instance of an Indian commodity exchange seeking direct ownership in an overseas trading platform, signalling NCDEX’s intent to widen its regional influence. 

NCDEX’s Strategic Investment 

According to NCDEX Managing Director and CEO Arun Raste, the board has cleared an investment of 70 million Sri Lankan rupees (around ₹24 crore) to acquire a minority stake and secure board representation in CSEDEX, subject to regulatory approvals in both countries.  

The proposal is rooted in an MoU signed earlier this year, under which NCDEX committed to building and operating the new exchange through a build–operate–transfer model.  

The collaboration will cover technical architecture, product design, training, and rule-setting for derivative market development in Sri Lanka, which currently lacks any exchange for commodity or financial derivatives. 

Regulatory Engagement and Market Context 

To proceed, NCDEX must obtain approval from SEBI, the Ministry of External Affairs, and the Department of Economic Affairs, while Sri Lanka’s SEC and government will assess the investment as foreign direct participation.  

The initiative comes as India and Sri Lanka witness improved bilateral engagement, reducing earlier political hesitations around cross-border exchange development.  

NCDEX Background and Sector Challenges 

NCDEX, incorporated in 2003 and regulated by SEBI, has been India’s leading agricultural derivatives platform. However, the exchange faced a significant setback after the Indian government suspended trading in key agricultural contracts including chana, wheat, mustard seed, soybean, moong, and crude palm oil, commodities that once contributed nearly 70% of its volumes.  

Despite multiple assessments indicating the suspension may have been counterproductive, trading remains halted. Expanding into Sri Lanka’s commodity ecosystem, covering tea, rubber, coconut, and spices offers NCDEX an avenue to diversify and reinforce its long-term relevance. 

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Conclusion 

NCDEX’s proposed stake in Sri Lanka’s new derivatives exchange represents a strategically timed expansion beyond domestic market constraints.  

By shaping CSEDEX’s foundational systems and securing board-level influence, NCDEX positions itself as a regional knowledge partner while tapping into a high-potential commodity economy.  

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