DEPOSITORY• A “Depository” is a provider of facility for holding securities .• It is a kind of bank for securities like shares, debentures, bonds, etc.
DEPOSITORY IN INDIA• National Securities Depository Ltd. – NSDL• Central Depository Services Ltd. - CDSL
DEPOSITORY PARTICIPANT•Agent of the depository.•Intermediary between the depository and the investors. •Registered with SEBI.
CONT…• Organization – holds securities for TRADING.• Shares, Debentures, Mutual Funds, Derivatives and Commodities.
DEPOSITORY IN INDIA• National Securities Depository Ltd. – NSDL Having 95 lakh Demat A/c - 300 DPs in India• Central Depository Services Ltd. - CDSL – Having 65 lakh Demat A/c - 500 DPs in India
HOW DO DEPOSITORY OPERATE?• Interacts with its investors.• Through its agents, called Depository Participants normally known as DPs.• By opening Demat A/C WITH DPS• Agreement to be made between the parties.
IMPORTANT POINTS• Registered owner of Securities- Physical certificates – INVESTOR electronic form- DEPOSITORY• Beneficial Owner (BO) - INVESTOR
SERVICES PROVIDED BY THE DEPOSITORY• Dematerialisation ( demat) - converting physical certificates to electronic form• Rematerialisation ( remat) is reverse of demat.• Transfer of securities, change of ownership.
BENEFITS OF DEPOSITORY• Immediate transfer of shares• No stamp duty on such transfers• Reduced transaction cost• Transparency
BENEFITS (CONT…)Elimination of risks - associated in dealing withPhysical certificates - loss / theft / forgery /etc.