Dematerialization of commodity contracts

Some basics for giving and taking delivery of commodities in the Indian commodity futures markets.

Dematerialization is the process of recording physical holdings (warehouse receipts) in electronic form. It facilitates the easy transfer of holdings through electronic mode. The investor opens an account with a depository participant (DP) of NSDL, gets the goods to the warehouse and makes a request for Demat credit. The warehouse accepts goods for storage and delivery. The goods are assayed and the information is given to the NSDL via the Registrar and Transfer Agent (R&TA). The R&TA is the link between the warehouse and the depository. NSDL, upon confirmation from the R&TA, credits the ICIN (a unique number allotted by NSDL for identification purposes) balance into the Demat account of the client.

In the next chapter we will learn about roles and responsibilities of entities in dematerialization.

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