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

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

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

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

CDSL:

619

NSDL:359

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

Process by which physical certificates of an investor are converted to an equivalent number of securities in electronic form and credited in to the investors account with his/her DP

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
Converting securities from electronic form to physical form.

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

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.

FUNCTIONS

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

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 investors 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

Investor gives Delivery Instruction to DP to debit ones account & credit the brokers account. Such instruction should reach the DPs office at least 24 hrs before the pay-in otherwise DP will accept the instruction at the investors risk.

Delivery Instruction Slip

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