Equity Mrkt Ppt

7/31/2019 Equity Mrkt Ppt

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What is a depository???

It is an Organization that holds securities of an investor in electronic

format through a registered Depository Participant.

A depository in very simple terms is a pool of pre-verified shares held in

electronic mode

It offers settlement of transactions in an efficient and effective way.


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BANK DEPOSITORYHolds Funds in an Account Hold securities in an account

Transfers Funds between

accounts

Transfers securities between accounts

Facilitates transfers without

having to handle money

Facilitates transfers of ownership

without having to handle securities

Facilitates safekeeping of

money

Facilitates safekeeping of shares


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Why did depositories comeinto existence?? Large volume of paper work

Paper based trading, clearing and settlement

Fake and stolen shares

Fake signatures and signature mismatch

Duplication and mutilation of shares

Transfer problems


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History First depository- 1947 Germany

In India- 1996 (DEPOSITRIES ACT,1996)


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NSDL

National Securities Depository Limited

Registered by SEBI on June 7 1996

First Depository to trade in Demat form

Promoted by IDBI,UTI,NSE NSDL has 359 DPs registered with SEBI

CDSL

Central Depository Services Limited

Commenced during Feb 1999

Promoted by Stock Exchange Mumbai CDSL has 619 DPs registered with SEBI

Depositories in India


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Legal framework for adepository

A depository system is governed by:

SEBI ACT,1992

The SEBI(Depositories and Participants) Regulations

1996

Byelaws of depository

Business rules of depository The Companies Act 1956


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At present 10 Stock Exchanges are connected to the

Depositories:1. NSE

2. The SE , Mumbai

3. Calcutta Stock Exchange

4. Delhi SE5. Ludhiana SE

6. Bangalore SE

7. Over the counter exchange of India

8. Madras SE

9. Inter connected SE

10. Ahmedabad SE


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Depositorysystem


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CONSTITUENTS

OF DEPOSITORY

SYSTEM

DEPOSITORY

PARTICIPANT

(DP)

BANKINGSYSTEM

INVESTOR

DEPOSITORY


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Facilities offered


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Dematerialisation

Conversion of the physical certificates into dematerialized holdings

Only shares registered in the name of the a/c holder are accepted

An investor may demat a part of his holdings and hold the balance in

physical mode

Demat shares are fungible.


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Rematerialisation

It is the exact opposite of Dematerialisation

It means conversion of demat holdings back into certificates

To get the securities in physical form, the investor has to request DP

for remat


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Trading

The Investor can purchase securities through his broker or DP

He can even sell his securities


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Opening an Account Foropening demat a/c, the following documents are required:

Demat opening form duly filled

Address proof

Photograph

Once a demat a/c is opened investor must sign an agreement with the DP

No minimum balance is required

The investor is provided with a transaction statement by his DP at

regular intervals based on which the investor will know his security balances


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Account transfer Transfers resulting from settlement of shares

Transactions between various beneficial owners

Other transactions like:

Buying of securities Selling of securities


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PledgingDepositories allow the securities placed with them to be

used as collateral to secure loans and other credits

Pledging demat securities is easierBoth borrower (pledger) and lender (pledgee) must have

depository a/cs

Pledgee should confirm the request through his DP

After the loan is repaid, the borrower can request for aclosure of pledge by instructing his DP


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Some other facilities are:

Redemption or Repurchase

Nomination

Demat of debt instruments

Dealing in Govt. Securities etc.


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Safety features indepositories

DP cannot effect any debit or credit in the demat a/c without the

consent of the investor

Regular reconciliation between DP and depositories

Periodic inspection by depositories of the office of DP

All investors receive their statement of a/cs periodically from the DP


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Benefits of depositories To the nation:

Growing and more liquid markets

Increase in competitiveness in the international market

Minimises the settlement risks and frauds in transactions

Helps to reduce delay in trading practices

Improved prospects for privatization


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To the inves t or

Reduces risks involved in holding physical certificates

Ensures transfer settlements and reduces delay in

registration of shares

Ensures faster communication to investors

Helps avoid bad delivery problem

Ensures faster payment on sale of shares

It provides more acceptability and liquidity of

securities


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To the brokers Reduces risk of delayed settlement

Ensures greater profit due to increase in volume

of trading

Eliminates chances of forgerybad delivery

Increases overall trading and profitability

Increases confidence in investors


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CREDITS HITEN BALANI 07 VASISHT GOPALKA 17

SAMYAK JAIN 27

PRANOTI PURO 37

ASHWINI SHAH 47

HARSH THARIANI 57

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Equity Mrkt Ppt