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Difference Between MCX and NCDEX

Difference Between MCX and NCDEX

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There are two main exchanges in India where commodity trading is facilitated: the Multi Commodity Exchange (MCX) and the National Commodity & Derivatives Exchange (NCDEX). Commodities can be traded on both of these platforms, but each of them caters to a different market and needs. Keep reading to understand what is Commodity Trading, what is the difference between MCX and NCDEX, and the common factors between MCX vs NCDEX. 

What is Commodity Trading?

Commodity trading means buying and selling raw materials or primary agricultural products in bulk. These raw materials are important for various industries. The commodities can be traded physically or through financial contracts. With commodity trading, investors can easily diversify their portfolios and reduce overall risk exposure. However, investors need to be aware of the risks and complexities involved in commodity trading, as the prices of commodities can highly fluctuate. 

Different exchanges regulate commodity trading, and some of the major ones are listed below:  

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Table of Content

  1. What is Commodity Trading?
  2. Difference Between MCX vs NCDEX
  3. Common Factors Between MCX and NCDEX 

Difference Between MCX vs NCDEX

The following are the differences between NCDEX and MCX.

Aspects

MCX

NCDEX

Definition 

India’s first listed exchange that offers commodity options contracts, bullion index futures, and base metal index futures contracts.

A multi-commodity exchange that offers a diverse range of products such as commodity futures, options in goods, and index futures. 

Founded in 

November 2003

April 2003

Primary Focus

Non-agricultural commodities

Agricultural commodities

Major Commodities Traded

Metals (gold, silver, copper), Energy (crude oil, natural gas)

Agricultural products (soybean, wheat, cotton, pulses, spices)

Type of Contract

Futures contracts

Futures and options contracts

Trading Volume

Here trading is mostly done in the metals and energy sectors

The trading is done in agricultural commodities. 

Liquidity

Generally high liquidity, especially in metals and energy.

Significant liquidity in agricultural commodities.

Geographical Focus

Mainly India, with some international involvement.

Primarily India

Use Case

Hedging against price fluctuations in metals and energy.

Hedging for agricultural producers.

Common Factors Between MCX and NCDEX 

Despite having differences, there are some common factors between MCX vs NCDEX, as mentioned below. 

  1. Both MCX and NCDEX were founded in the same year 2003.
  2. MCX and NCDEX are regulated by the Securities and Exchange Board of India (SEBI).
  3. In addition to offering electronic trading platforms, both MCX and NCDEX facilitate the trading of commodity derivatives.
  4. Traders can buy or sell commodities through futures contracts at predetermined prices for delivery in the futures segment on both exchanges.
  5. MCX and NCDEX operate from Monday to Friday. 
  6. NCDEX and MCX provide efficient and transparent trading through advanced technology.

Conclusion
In commodity trading, both MCX and NCDEX serve different roles. MCX focuses on non-agricultural commodities with a broad participant base. Whereas, NCDEX focuses on agricultural products to support local farmers and stakeholders. By understanding the difference between NCDEX and MCX traders and investors can easily select the right platform based on their interests and needs. Many traders prefer an online trading app for easy access and convenience. The key to successful participation in commodity trading is knowing whether your trading strategy aligns with the MCX or NCDEX. 

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FAQs on MCX and NCDEX

London Metal Exchange, or LME, is a global market that trades in base metals, while MCX is an exchange of India that deals with various commodities, including metals, energy, and agricultural products.

NCDEX provides the highest returns while dealing with agricultural products, whereas MCX deals with commodities like gold, silver, and other metals.

The Securities and Exchange Board of India (SEBI) controls the NCDEX and MCX.

Yes, you can trade with NCDEX. You just need to have a commodity trading account with a registered stockbroker that facilitates commodity trading.