NCDEX executes first settlement of trade through demat

In a major development for the Indian commodities market, the first settlement of trade in demat was executed on the National Commodity & Derivative Exchange (NCDEX) today.

This is akin to what happens in securities market. For this purpose, NCDEX has entered into an agreement with the National Securities Depository Ltd (NSDL) and Karvy Consultants Ltd, who are its registrars.

ICICI Bank and the Stock Holding Corporation of India Ltd (SCHIL) facilitated the dematerialisation on behalf of the buyer and seller.

On the expiry of the futures contract on February 20, 2004, NCDEX had matched instructions for delivery.

Traditionally, matching of such delivery instructions are carried out through exchange of warehouse receipts.

But on NCDEX platform, the delivery was effected through demat process, which is essentially an electronic mode of settlement.

The process involved debiting the commodity demat account of the seller and crediting the demat account of the buyer for the delivery transaction.

"This marks a major milestone not only for NCDEX but India. It proves that the novel experiment which we initiated -- for the first time perhaps in the world -- will further strengthen the exchange's delivery processes," said P H Ravikumar, managing director of the exchange.

NCDEX also commenced its evening session on Monday, February 23.

The evening session timings would be from 7 p. m. to 11.30 p. m on all trading days.

"The Indian commodity market is globally connected given the direct correlation between international market movements in commodity prices and local prices. The evening session, overlapping with the trading hours of important commodity exchanges in Europe and the United States would enable our trading members to take advantage of this relationship and avail of the best prices across exchanges," Ravikumar added.