Introduction of the demat segment: A major development

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The Bombay Stock Exchange (BSE) commenced trading in the dematerialized (Demat) segment with effect from 29th December 1997. It took several years to implement such a system since the liberalization of the Indian financial system along with the liberalization of the national economy. In this segment, there is no physical delivery of securities as in the physical segment. Trading in the Demat segment is on a rolling settlement basis (T + 5) where T stands for a trade day.

The pay-in and pay-to for the transactions in this segment are both conducted on a single day. The pay-in and payout for transactions executed on Monday is conducted on the following Monday, i.e., the corresponding day in the following week. The auction session for shortages in the demat segment is conducted on BSE Online Trading System (BOLT) on the day after the pay-in/pay-out. The pay-in/pay-out (money part) takes place through computerized posting of debits and credits in the brokers’ bank accounts as in the case of the physical segment.

With effect from 6th April 1998, deliveries in the demat mode are permitted in the physical segment. This is because sellers are allowed to give delivery in demat or electronic form. They, however, have an option to change the mode of delivery till the pay-in day, i.e. Thursday. This is in sharp contrast to the time limit allowed before the advent of the virtual trade, wherein more time was allowed to complete a transaction. In earlier times, such a situation came about due to the cumbersome book keeping process that was time consuming. Also the means of communicating was not that much faster as in recent times, wherein, through the use of the internet and other communication mediums, it is possible to get in touch with the developments in global markets at the click of a button.

commodities trading companies often require more time to conclude a transaction mainly due to the fact that the delivery often takes up much time. When the national government changes the economic policies, the phenomenal changes in the financial market is rightly felt in the commodities market.