InvestorQ : How does delivery in commodities differ from delivery in equities?
ramya Bhaskaran made post

How does delivery in commodities differ from delivery in equities?

Answer
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Arya Nanda answered.
2 years ago


Taking delivery and giving delivery in the equity market is quite simple. In the old days, this was done by endorsing the share certificates with a transform form. But in the modern demat era, giving and taking delivery of equities has become a lot simpler as it merely involves a debit or credit to your demat account. Spot commodity markets are, however, a lot more complex. For example, if you bought cotton in the spot market then you need to take delivery of physical cotton. Of course, the process is substantially simplified as the spot transaction can be done with the help of warehouse receipts. In this case, the cotton bales in an authorized warehouse will be evaluated by an assayer and an auditor will issue the certificate of value and the existence of the cotton in the premises. Based on these Warehouse Receipts, the spot transaction can be concluded and settled and the actual delivery can happen after that as it involves physical movement.