DEPOSITORY :

DEPOSITORY An Organisation that holds securities of investor in electronic format at

the request of the investor through a registered Depository Participant.

Diff b/w Bank & Depository :

Diff b/w Bank & Depository BANK Holds Funds in an Account Transfers Funds
between accounts on the instruction of the account holder. Facilitates transfers without
having to handle money Facilitates safekeeping of money DEPOSITORY Hold securities
in an account Transfers securities between accounts on the instruction of the account
holder Facilitates transfers of ownership without having to handle securities Facilitates
safekeeping of shares

No. of Depositories registered with SEBI :

No. of Depositories registered with SEBI National Securities Depository Limited

(NSDL):-the largest depository of Indian stocks. Trades done is NSE - National Stock
Exchange are linked directly to NSDL. Central Depository Services Limited (CSDL)-
Bombay Stock Exchange are linked directly to CDSL.

DEPOSITORY PARTICIPANT :

DEPOSITORY PARTICIPANT An agent of the depository through which it interfaces

with the investor. A DP can offer depository services only after it gets registration from
SEBI.

D.Ps registered with SEBI :

D.Ps registered with SEBI CDSL: 619 NSDL:359

Benefits of availing depository services :

Benefits of availing depository services Safe & convenient Immediate transfer of

securities No stamp duty for transfer of securities Elimination of risks with physical
certificates Reduction in paper work & transaction cost Nomination facility Change in
address gets automatically updates with all companies Automatic credit in demat
accounts
Dematerialization :

Dematerialization Process by which physical certificates of an investor are converted to

an equivalent number of securities in electronic form and credited in to the investor’s
account with his/her DP

Process :

Process Fill in a Demat Request Form (DRF) available with the DP and submit with
physical certificates. Separate DRF should be filled for each ISIN no. DP intimates
Depository of the request through the system DP submits the certificates to the registrar
Registrar confirms the demat request from depository After dematerializing certificates,
registrar updates accounts & informs depository Depository updates its accounts &
informs DP DP updates accounts & informs investor

Rematerialization :

Rematerialization Converting securities from electronic form to physical form.

Secondary Market :

Secondary Market The secondary market, also known as the aftermarket, is the financial
market where previously issued securities and financial instruments such as stocks,
bonds, options, and futures are bought and sold.

Function :

Function Secondary marketing is vital to an efficient and modern capital market In the
secondary market, securities are sold by and transferred from one investor or speculator
to another. It is therefore important that the secondary market be highly liquid The
greater the number of investors that participate in a given marketplace, and the greater the
centralization of that marketplace, the more liquid the market.

Slide 12:

Secondary markets mesh the investor's preference for liquidity (i.e., the investor's desire
not to tie up his or her money for a long period of time, in case the investor needs it to
deal with unforeseen circumstances) with the capital user's preference to be able to use
the capital for an extended period of time. Accurate share price allocates scarce capital
more efficiently FUNCTIONS
Trading :

Trading Purchase: The broker will receive the securities in his account on the payout day.
The broker will give instruction to its DP to debit his account & credit investor’s account
Investor will give receipt Instruction to DP for receiving credit by filling appropriate
form. OR Gives standing instruction for credit in to ones accounts that will obviate the
need of giving Receipt instruction every time.

Sell :

Sell Investor gives Delivery Instruction to DP to debit ones account & credit the broker’s
account. Such instruction should reach the DP’s office at least 24 hrs before the pay-in
otherwise DP will accept the instruction at the investor’s risk.

Delivery Instruction Slip :

Delivery Instruction Slip DIS is filled while giving delivery instruction to the DP. This is
similar to the cheque book of a bank account.