2. Clearing corporation
Responsible for post trade activities.
National Securities Clearing Corporation Ltd.
(NSCCL) 1st Clearing corporation in the country
Clearing Members
Link between accounts with clearing bank &
depositories
Custodians
They settle trade on behalf of trading members
At present there 13 custodians
3. Clearing Banks
Link between clearing members & clearing
corporation
Depositories
Depositories holds securities in
dematerialized form
National Securities Depositories Ltd. (NSDL)
Central Depositories Services Ltd. (CDSL)
Professional Clearing Member
They clear & settle trades executed for
their clients
4. Speculation is the practice of engaging
in risky financial transactions.
Parties engaged in speculation are
called as Speculators
Types of Speculators
Jobber: jobber is a professional
speculator who has complete
information of shares he deals
He transact in his own name
Jobber is member of stock exchange
only deals with members
5. Bull:
He purchase various types of shares to sell them at
higher price in future.
Bear:
Bear always in position to dispose of securities
which he does not possess.
He takes advantage of an expected fall in price.
Lame duck
When bear fails to meet his obligations. Bear agrees
to deliver shares on specific date but if he fails to
deliver because of non availability of shares.
Stag
He purchases shares from new company & shown
himself as genuine investor.
He purchase shares to resell at profit.
6. Selection of a broker
Opening DEMAT account
Placing the order
Executing the order
Settlement
On spot delivery settlement (T+2)
Forward settlement (T+5, or 5 or 7)
7. Depositories means a central location for
keeping securities on deposit
A Depository can be compared to a bank
for securities
Objectives
To avoid risk of settlement
Reduce the time for transfer of securities
Reduce the cost of transactions
Enhance the efficiency
Centralized system for handling securities
8. Services to investors
Services to participants
Demat Account opening
Dematerialization
Rematerialization
Settlement of trades
9. The Depositories Act, 1996
National Securities Depositories ltd.,
August 8, 1996 (NSE)
Central Depositories Services ltd., Feb
1999 (BSE)
11. 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.
There were 288 DPs of NSDL and 597
DPs of CDSL registered with SEBI.
12. First Depository in India
8977 Average number of accounts opened per
day
Established infrastructure based on
international standards
13. Industrial Development Bank Of India (IDBI)
Unit Trust Of India (UTI)
National Stock Exchange (NSE)
State Bank Of India
Global Trust Bank Limited
City Bank
Standard Chartered Bank
HDFC Bank
HSBC
Deutsche Bank
Dena Bank
Canara Bank
14. NSDL is managed by professional board
of directors.
The day to day operations are
conducted by managing director.
To assist MD, the board appoints 15
members of executive committee
15. Enables dematerialization & Rematerialization
Maintains investors’ holdings in electronic form.
Settlement of securities traded on exchanges.
Carries out settlement of trades (off market –
traders)
Transfer of securities.
Pledging of dematerialized securities.
Electronic credit in public offerings of co’s
Receipt of non-cash corporate benefit in
electronic form
Stock lending and borrowing
16. 1. Elimination of bad deliveries
2. Elimination of risk with physical
certificate
3. No stamp duty for transfers
4. Immediate transfer & registration
5. Faster settlements cycle
6. Reduction in handling of paper
7. Elimination of problems in change of
address
8. Reduction in brokerage
17. CDSL is the second Indian central securities
depository based in Mumbai
CDSL received the certificate of commencement
of business from SEBI in February, 1999.
OWNERSHIP
CSDL was promoted by Bombay stock exchange
(BSE) in association with several Indian and
foreign banks. The initial of the company is
rupees 104.50 cores.
18. Bombay Stock Exchange
Bank Of India
Bank Of Baroda
State Bank Of India
HDFC Bank ltd
Standard Chartered Bank
Canara Bank
Central Bank Of India
Bank Of Maharashtra
The Jammu And Kashmir Bank ltd
The Calcutta Stock Exchange
19. A professional board of director with vast
experience in capital market and banking.
The day to day operations are conducted by
MD / CEO in his/her functions, the board
appoints the management team of 10
members.