Question

(ii) National Clearance and Depository System (NCDS).

Hint:

Remember: NCDS → Electronic settlement + Safe custody of securities.

Answer 1

Concept: NCDS is a system designed to ensure smooth settlement and safe handling of securities in electronic form.
Step 1: Definition.
National Clearance and Depository System (NCDS) is a mechanism that facilitates electronic clearing, settlement, and safe custody of securities.
Step 2: Functions.

• Dematerialization of securities
• Safe storage of securities in electronic form
• Faster settlement of trades
• Reduction of paperwork and risk

Step 3: Importance.

• Enhances efficiency in stock market operations
• Reduces fraud and delays

Step 4: Conclusion.
Thus, NCDS ensures secure and efficient functioning of the securities market.