Equity Basics DP


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Equity Basics DP

  1. 1. Equity BasicsDepository<br />
  2. 2. Depository <br />A depository is an organization where the securities of an investor are held in electronic form, at the request of the investor through the medium of a Depository Participant<br />If an investor wants to utilize the services offered by a depository, he has to open an account with the depository through its Depository Participant. This is similar to opening an account with any of the branches of a bank in order to utilize the services of that bank<br />
  3. 3. What is dematerialization?<br />It is process of converting securities from physical form into electronic form<br />
  4. 4. Who is a Depository Participant?<br />A Depository Participant (DP) is an agent of the depository and is authorized to offer depository services to investors<br />According to SEBI guidelines, financial institutions, banks, custodians, stockbrokers, etc. can become DP with a depository<br />
  5. 5. Who is a Depository Participant?<br />A DP is an interface between customers and the depository<br />A customer opens an account with a DP and commences operations <br />Balances are maintained with the depository and are available through the DP<br />DP intimates customers’ status of holdings or transactions from time to time<br />
  6. 6. Depositories in India <br />Central Depository Services (India) Limited <br />- Promoted by BSE, BoI, BoB, SBI and HDFC Bank<br />National Securities Depository Limited (NSDL)<br />- Promoted by UTI, IDBI and NSE <br />Securities and Exchange Board of India (SEBI) is the regulating authority<br />
  7. 7. Depository: Bank - an analogy<br />Bank <br />Holds funds in accounts<br />Transfers funds between accounts<br />Transfers without handling cash<br />Safekeeping of money<br />Depository<br />Holds securities in accounts<br />Transfers securities in accounts<br />Transfers without handling physical securities<br />Safekeeping of securities<br />
  8. 8. Services offered by a DP<br />Account Opening & Maintenance<br />Dematerialization of Securities<br />Rematerialization of Securities<br />Transfer of Securities<br />Pledging of Securities<br />
  9. 9. Types of accounts<br />Beneficiary Account<br />These are ownership accounts, for use of Individuals, Corporates, HUFs etc<br />Pool Account <br />These are commercial accounts , for use of broker, for transfer of securities to and fro, from Exchange or Clearing Corporation<br />All the securities received in the pool account should be transferred to the respective beneficial accounts within 24 hrs<br />
  10. 10. How are securities dematerialized?<br />Physical securities are to be submitted to DP, along with DRF<br />Each security certificate should be defaced by the client. Defacing of certificate to be done by putting a stamp ‘Surrendered for Dematerialization’<br />
  11. 11. Demat Requisition Form<br />
  12. 12. Dematerialization process<br />Client submits DRF and physical certificates to DP<br />DP intimates to depository and sends certificates with DRF to R&T agent<br />R&T agent confirms dematerialization to depository<br />Depository credits securities to beneficial owner<br />Depository<br />Investor<br />DP<br />R & T Agent<br />
  13. 13. Dematerialization Process<br />How many copies of DRF are made and who all get them?<br />3 Copies<br />Client / Account Holder<br />Depository participant<br />R & T agent<br />
  14. 14. Trading and settlement<br />Market Trade<br />Trade done through a broker on the exchange. Has to be settled through the exchange<br />Off Market Trade <br />Trade done between two parties without the involvement of a broker. Has to be settled mutually between the two parties, shares moves from one account to another<br />
  15. 15. Delivery Instruction Slip- NSDL<br />
  16. 16. Delivery Instruction Slip- CDSL<br />
  17. 17. Settlement of market trade<br />Seller gives delivery instructions to DP to move securities to broker’s account<br />Securities are transferred to clearing corporation from brokers account<br />On pay out securities are moved from Clearing corporation to buying broker’s account<br />Buying broker credits buyer’s account<br />Clearing Corporation<br />Broker<br />Broker<br />Buyer<br />Seller<br />
  18. 18. Off market trade<br />Depository<br />Seller gives Delivery Instruction to his DP<br />Securities are transferred from seller’s DP to Buyer’s DP<br />Buyer gets credit automatically into his account<br />DP1<br />DP2<br />Buyer<br />Seller<br />
  19. 19. Who can open a demat account?<br />Individuals, NRIs, Minors, HUFs, Trusts (Regd), Corporates can open demat account<br />Proprietary firms, partnership firms and unregistered trusts cannot open a demat account as the Companies Act,1956 prohibits these entities from becoming shareholders of companies<br />
  20. 20. Basic documents for account opening<br />Registration form<br />Photograph/s with signatures across it<br />PAN Card<br />Proof of residence-Passport, Voter’s ID card, Driving license, Ration card<br />Proof of identity-Passport, Voter’s ID card, Driving license, PAN card<br />Bank Account Proof-Bank statement, cancelled cheque<br />
  21. 21. Depository Charges<br />
  22. 22. CDSL charges<br />
  23. 23. NSDL charges<br />
  24. 24. Thank You<br />