13020048-Depository-System

8/7/2019 13020048-Depository-System

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DEPOSITORY SYSTEM






NSDLNSDL -- Bank Bank ---- An AnalogyAn Analogy

BANK BANK

BANK BANK

Holds funds inaccounts

Holds securities inaccounts

Transfers funds

between accounts

Transfers securities

between accounts

Transfers without

handling cash

Transfers without

handling physical

securities Safekeeping of money Safekeeping of securities

NSDL NSDL

NSDL NSDL



� Reduce the time for transfer of securities.

� Avoid the risk of settlement of securities.

� Enhance liquidity and efficiency.

� Reduce cost of transaction for the investor.� Create a system for the central handling of

all securities.

� Promote the country·s competitiveness by

complying with global standards.� Provide service infrastructure in a capital

market.




� Accepting deposit of securities for custody.

� Making computerized book entry deliveriesof securities which are immobilized in its

custody.� Creating computerized book entry pledges

of securities in its custody.

� Providing for withdrawals of securities.

� Undertaking corporate actions likedistribution of dividend and interest.

� Redemption of securities on maturity.




� This system will eliminate paper work as the bookentry system does not need physical movement ofcertificates for transfer process.

� The risk of bad deliveries, fraud and misplaced andlost share certificates will not exist.

� The electronic media will shorten settlement time

and hence the investor can save time and increasethe velocity of security movement.� Investor will be able to change portfolio more

frequently.� The distribution of dividend, interest and other

benefits will be speedier as the ownership can be

easily identifiable.� The cost of transfer is less as the share transfers are

exempt from stamp duty.� Faster payment in case of sale of shares.




� The companies will be able to know theparticular of beneficial owners and theirholding periodically.

� At the time of declaration of dividends,bonus etc. there will not be any rush fortransfer related activities for the companies.




� The information technology has brought outrevolutionary changes in the operations ofstock exchanges in India. The traditionalmethods of trading without the use oftechnology was time consuming and

inefficient. Further, it imposed limits ontrading volumes and efficiency. Toovercome those defects and to provideefficient and transparent services, the NSEhas introduced a nation-wide on line fullyautomated screen based trading system(SBTS). Now, other stock exchange havebeen forced to adopt SBTS and today Indiacan boast that almost 100% trading takeplace through electronic order matching.




� Under SBTS, a member can punch into the

computers quantities of securities and theprices at which he likes to transact thetransaction. It is executed as soon as it findsa matching sale or buy order from a counter

party. Thus, technology is used to carry thetrading platform from the trading hall of theexchanges to the premises of the brokers.


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13020048-Depository-System