Depository

Two new words have drastically changed the face of Stock Market. They are SCREEN BASED TRADING and SCRIPLESS TRADING. Screen Based Trading has replaced the obsolete outcry system, resulting in nationwide trading network of BSE and NSE terminals; and Scripless Trading has removed botherations of dealing in physical shares. Organization which manages the securities in electronic form as a custodian, and carry on the scripless trading on bourses through mandate of the account holders, is know as Depository. In case you are tired of delayed transfers, lost certificates, bad deliveries; then DEPOSITORY is the answer.

DEPOSITORY is a combination of custodian and bank functions for the shares, it is a facility where securities of shareholders are held. and transferred electronically.

Depository is a corporate body, which hold the securities electronically, and deals in them on behalf of the clients. It works through Depository Participants called DP. Depository Participant can be a company or bank, which is a member of depository. DP is linked to the depository through satellite communication. In order to get services of depository, shareholder need to open account with the DP.

National Security Depository Limited (NSDL) has been promoted by IDBI, UT1 and NSE. Another such depository Central Depository Services Limited (CDSL) has been promoted by BSE. Depository functions are fully computerized and integrated with computers of Stock Exchanges and DPs.

Shareholder intending to get depository services opens an account with DP. He can then convert his physical shares in electronic shares, which is called a process of dematerialization. Physical certificates are surrendered to registrar, who gives credit for the shares to depository. Electronic shares can be reconverted in to physical shares also. This is called rematerialization.

Now all the deals on Stock Exchanges need to be settled only in demat. All the scrips are under compulsory demat segment. Deals for purchase and sell of shares are done in the similar way, except that physical delivery need not be sent for sale, and obtained for purchase. Purchasers and sellers have just to give mandate for the deals in specified formats. Depository accounts are appropriately credited and debited. Computers of depository and DPs are connected through satellites, to give instant and simultaneous effect of transactions. Statement of account is given every month, giving details of credits, debits and balance in the account.

Benefits of dividend, right, bonus accrue to members in the same way. Depositories give details of owners on record date, and based on this; the benefits are passed on. Depository is your paperless portfolio, which is electronic, fully secured and most convenient.