Depository participant

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In India, a Depository Participant (DP) is described as an agent of the depository. They are the
intermediaries between the depository and the investors. The relationship between the DPs and the
depository is governed by an agreement made between the two under the Depositories Act. In a strictly
legal sense, a DP is an entity who is registered as such with SEBI under the provisions of the SEBI Act. As
per the provisions of this Act, a DP can offer depository-related services only after obtaining a certificate of
registration from SEBI.

SEBI (D&P) Regulations, 1996 prescribe a minimum net worth of Rs. 50 lakh for stockbrokers, R&T agents
and non-banking finance companies (NBFC), for granting them a certificate of registration to act as DPs. If
a stockbroker seeks to act as a DP in more than one depository, he should comply with the specified net
worth criterion separately for each such depository. No minimum net worth criterion has been prescribed
for other categories of DPs; however, depositories can fix a higher net worth criterion for their DPs.

Contents
[hide]

• 1 Basics of Depository

• 2 Benefits of Depository

• 3 How do Depository operate

o 3.1 Demat Account

Opening

• 4 Services provided by

Depository

• 5 No. of Depository in the

country

• 6 References

[ edit]Basics of Depository
Depository is an institution or a kind of organization which holds securities with it, in which trading is done
among shares, debentures, mutual funds, derivatives, F&O and commodities. The intermediatories perform
its actions in various kinds of securities at Depository on the behalf of its clients. These intermediatories are
called Dipositories Participants. There are basically two kinds of depositories in India. One is the National
Securities Depository Limited(NSDL) and the other is the Central Depository Service Limited(CDSL). Every
Depository Participant(DP) needs to be registered under this Depository before starting operation or trade
in the market.

[ edit]Benefits of Depository

 Bad delivery eliminated

 Immediate transfer of shares
 No stamp duty on such transfers
 Elimination of risks that are normally associated in dealing with Physical
certificates - loss / theft / mutilation due to careless handling / forgery / etc.

 Reduced transaction cost

[ edit]How do Depository operate

Depository interacts with its clients / investors through its agents, called Depository Participants normally
known as DPs.

For any investor / client, to avail the services provided by the Depository, has to open Depository account,
known as Demat A/c, with any of the DPs.

[edit]Demat Account Opening

A demat account is opened on the same lines as that of a Bank Account. Prescribed Account opening
forms are available with the DP, needs to be filled in. Standard Agreements are to be signed by the Client
and the DP, which details the rights and obligations of both parties. Along with the form the client requires
to attach Photographs of Account holder, Attested copies of proof of residence and proof of identity needs
to be submitted along with the account opening form.

In case of Corporate clients, additional attachments required are - true copy of the resolution for Demat a/c
opening along with signatories to operate the account and true copy of the Memorandum and Articles of
Association is to be attached.

[ edit]Services provided by Depository

 Dematerialisation (usually known as demat) is converting physical

certificates to electronic form

 Rematerialisation, known as remat, is reverse of demat, i.e. getting

physical certificates from the electronic securities

 Transfer of securities, change of beneficial ownership

 Settlement of trades done on exchange connected to the Depository

[ edit]No. of Depository in the country

Currently there are two depositories operational in the country.

1. National Securities Depository Ltd. - NSDL - Having 95 Cr.

Demat A/c as on 31-03-2010 - 300 DPs in India

2. Central Depository Services Ltd. - CDSL - Having 65 laks

Demat A/c as on 31-03-2010 - 500 DPs in India

[ edit]References

 Information about DPs on CDSL website

 Information about DPs on NSDL website
 Information about Depository Partipant By SEBI India

land lakad

Categories: Financial services in India

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