Depository (Demat)services

Introduction
Financial services relating to holding, maintaining and dealing in securities in electronic form by a financial intermediary known as depository or demat service IPO, bonus, rights, converted securities.

 Is demat account must? Why demat account

Reduces brokerage charges Hypothecation easy Quick ownership of securities Easy receipt of IPO Bad delays, signature mismatch, postal delays,loss in transit Eliminates risk associated with forgery, loss due to thefts, fire Stamp duty(0.5 on physical certificate) Nomination is possible

Depository/ depository participant

Depository: is a company formed and reg under companies act 1956. SEBI 1992 Legal ownership of shares ,reg owner The first two depositors in India
NSDL national securities depository ltd CDSL central depository service ltd

Depository has an agent who are called as depository participants

What services are provided by a DP?

Interact with investors. Maintain investor holdings in electronic form Provide for dematerialization and rematerialization Effective settlement of securities traded on exchange Allow for receipt of allotment in the electronic form Hypothecation facility fi

 Off-market trade: Trades which are not settled through the Clearing Corporation/ Clearing House of an exchange are classified as "Off Market Trades".

Registrar and Transfer agent

Maintain ledgers Bonus, warrants, rights.

Clearing corporation
Pay-in and pay-outs of brokers who have traded securites on stock exchange.

Functions of depository
Dematerialization Dematerialization Transfer of securities Pledge and hypothecation. Transmission securities Freezing of the account Opening and closing of the account

Transaction settlements under depository system

Electronic settlement of trade

For selling dematerialized securities
Investor sells securities in any stock exchange Investor give instructions to DP to debit his account and credit clearing member pool account Before pay-in day investors broker transfers the securities to the clearing corporation. Broker receives payment from stock exchange Seller receives money from the broker

 Buying dematerialized securities

Purchase Broker receives payment Broker arrange money to the clearing house Broker receives credit of securities Investor receives shares.

NSDL
UTI ,IDBI Maintain accounts, dematerialization, dematerialization, settlement of trades. Pledge, hypothecation Transfer of shares to clearing house Distribution of cash and non cash benefits Dematerialization of warehouse receipt The dividend distribution scheme -

CDSL
BSC, bank of india, SBI,HDFC.. Dp are directly connected to the CDSL

 Thank you.