NCDEX set to adopt new demat system by January

The National Commodity and Derivatives Exchange (NCDEX) plans to do away with the present dematerialised form of commodity trading and introduce a new system by January, Managing Director and Chief Executive Officer R Ramaseshan told reporters today.

The move is aimed at increasing volumes and participation in commodity trading as well as to make the process more user-friendly, he said.

Under the present system, participants in commodity trading on NCDEX are required to open dematerialised accounts with designated depository participants for physical supply and delivery of commodities. Dematerialised form of trading involves a cost of Rs 1,200 per 1 deliverable contract, said Unopam Kausik, chief business officer of the exchange. The new system is undergoing trial and an all-India rollout will be made by January 1, he said.

“With the new system, we will do way with requirement of depository participants,” Kausik said. In commodities with lower margins, traders are not ready to incur cost of dematerialised trading, he said. In the case of rubber, the average margin per contract is in the range of Rs 400-500, he said.

Naturally, rubber traders are not willing to take part in the dematerialised trading system of NCDEX, he said.

Regarding the cost to be incurred by traders under the new system, Kausik said, “We are still working out the cost under the new system.”

Under the new system, trading volumes in rubber contracts in NCDEX are expected to move up, he said. At present, there is no significant participation in NCDEX rubber contracts, he said. Ramaseshan said the Power Exchange of India, floated jointly by NCDEX and the National Stock Exchange, will begin operations by October 1. “We are in the process of completing the software and other operational requirements for the launch of the exchange,” he said.

Ramaseshan also ruled out possibilities of NCDEX shifting its focus from agricultural commodities following restrictions imposed by the government on certain agricultural commodities. “We will continue to focus on agricultural commodities as 98 per cent of the volume is generated by these commodities,” he said.