DEMAT-security of securities

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DEMAT-security of securities Powered By Docstoc
Of Shares & Securities
What is Demat

 Conversion of physical securities into
  electronic form
 No distinctive number to securities
  required as depositing & withdrawing
  money from a bank without bothering
  about distinctive no. of currency
Demat-need ?

   bad deliveries due to signature difference
   mistakes in completion of transfer deeds
   tearing and mutilation of securities
   fake certificates
   fraudulent interception of certificate in transit
   transfer stamp duty
   extra consumption of time by the Companies
   postal delays and charges etc
 Introduced in India through the enactment of
  the Depositories Act, 1996
 It is not mandatory
 One may keep its holding partly in physical
  form and partly in Demat form
 A select list of securities announced by SEBI
  can be delivered only in demat form in the
  stock exchanges connected to NSDL

   Participants:
    – Investors
    – The Depository
       • NSDL [national securities depository ltd.]
       • CDSIL[central depository of securities india ltd.]
    – The Depository Participants
    – The Issuing Company
Investors [Beneficial Owner]
 Individual
 Partnership Firm
 Company

    “Beneficial Owner” is a person in whose name a
     demat account is opened with Depository for the
      purpose of holding securities in the electronic

 a depository is an organisation, which
  holds the beneficial owner's securities in
  electronic form, through a registered
  Depository Participant (DP).
 A depository functions somewhat similar
  to a commercial bank.
 To avail of the services offered by a
  depository, the investor has to open an
  account with it through a registered DP.
Depository Participant
A Depository Participant (DP) is an agent
  of the depository who is authorised to
  offer depository services to investors.
Financial institutions, banks, custodians
  and stockbrokers complying with the
  requirements prescribed by SEBI/
  Depositories can be registered as DP.
Procedure of Demat-
for an investor
   Fill DRF(Demat              Submit the DRF and
    Request Form)                Share Certificates to
    available with DP            DP
                                DP would forward
   Deface the share
                                 them to the
    certificate(s) one           issuer/their Registrar
    wants to dematerialise       & Transfer Agent
    by writing across           Investor’s depository
    “Surrendered for             a/c would be credited
    Dematerialisation”           with the
The time involved in the
   Dematerialisation is normally completed
    within 15 days after the share
    certificates have reached the
    issuer/their R&T agent. Thus it will take
    only a month from the date one hands
    over shares, to receive Demat Credit.
Trading & Settlement in
Dematerialised Securities
   If you are a buyer:
    – Purchase securities in any of the S.E.s(connected
      to NSDL) through a broker of your choice and
      make payment to your broker
    – Broker arranges payment to clearing
      corpo./clearing house of the stock exchange
    – Broker receives cr. in his clearing a/c
    – Broker can directly transfer these securities to your
    – Broker gives instructions to your DP to debit his
      clearimg a/c and credit your depository a/c.
    – You give instructions to your DP for receiving Cr.
    – If instructions match your a/c with your DP is
Trading & Settlement in
Dematerialised Securities
   If you are a seller
    – Sell your demat securities in any of the Stock
      Exchanges linked to NSDL through a broker
    – You give instructions to your DP for Debit of your
      Depository a/c and Credit of your broker’s clearing
      member a/c at least 24 hrs working day
      prior to the pay-in date or before the deadline
      prescribed by your DP
    – On pay in day your broker gives instruction to his
      DP for delivery to clearing corpo.
    – Broker receives payment from the clearing corpo.
    – You receive the payment accordingly.
    Charges are paid through DPs
     – Custody charges: 0.01% p.a.(Rs.10 for every
       Rs.100,000) of the average market value of
       securities held in a/c
     – Settlement charges: 0.02% (Rs.20 for every Rs.
       100,000)of the market value of the securities
       being transferred from selling broker to the
       clearing corpo.of the stock exchange and same
       charges from clearing buying agent
     – Rematerialisation charges of 0.10%(Rs.100 for
       every Rs.100,000) of the market value of
       securities or Rs.10,whichever is higher
Other Benefits
 Allotment directly in Demat form
 Pledge of Demat holdings possible,
 Lending/Borrowing of Demat Securities
  to/from an Authorised intermediary,
 Freezing of a/c possible
 Transmission of holdings,
 Nomination facility

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